Rhode Island Should Not Imitate Massachusetts’ Tax Mistakes

A millionaire’s taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. erodes whatever tax advantage Rhode Island currently has against higher-tax peers elsewhere in New England.

Rhode Island lawmakers are debating raising the state’s top income tax rate. Though billed as a tax hike on high earners, the consequences would manifest across the state’s entire economy—creating a risk that Rhode Island will tax its way into uncompetitiveness. 

The two identical bills—H 5473 in the House and S 329 in the Senate—would raise the state’s top marginal individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. rate from 5.99 percent to 8.99 percent on income above approximately $625,000 (in 2025 dollars), adjusted for inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. .

Though structured as a surtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services. , this proposal effectively creates a fourth income tax bracket, and one that doubles down on the marriage penaltyA marriage penalty is when a household’s overall tax bill increases due to a couple marrying and filing taxes jointly. A marriage penalty typically occurs when two individuals with similar incomes marry; this is true for both high- and low-income couples. that already puts married couples at a disadvantage compared to single filers. It erodes whatever tax advantage Rhode Island currently has against higher-tax peers elsewhere in New England. If enacted, Rhode Island would have the eighth-highest top marginal state individual income tax rate in the country (excluding the District of Columbia), up from the 14th-highest currently.