Rhode Island Joins Tax-the-Rich Push With New Millionaire Levy
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Rhode Island has joined a growing list of states adopting a millionaire tax, as it moves to stabilize its budget despite warnings that even a small outflow of wealthy residents could affect the nation’s smallest state.
Governor Dan McKee signed the budget on Friday, creating a new tax on income above $1 million and raising the top rate from 5.99% to 8.99% over three years. McKee originally proposed implementing the full increase immediately, but lawmakers chose a phased rollout to better assess its revenue impact. “By asking the wealthiest Rhode Islanders to pay a little more, this budget also protects Rhode Islanders from reckless cuts by the Trump administration,” he said.
The move follows Democratic-led states including Massachusetts, Washington, and Maine, which have raised taxes on high earners. In California, a healthcare workers union and allies are backing a ballot proposal for a one-time 5% tax on wealth above $1 billion.
Governor McKee, who opposed the tax last year, shifted support in January, citing budget gaps tied to federal spending cuts under President Donald Trump. He is now running for reelection and faces a primary challenge from former CVS executive Helena Foulkes.
In Maine, Governor Janet Mills reversed her opposition during a competitive Democratic Senate primary won by Graham Platner, who will face Republican Senator Susan Collins in November.
Massachusetts, the first New England state with a millionaire tax, has collected nearly $9 billion since 2023, more than expected, with revenue rising annually. Rhode Island officials project about $135 million per year once fully implemented.
Business groups including the Greater Providence Chamber of Commerce oppose the measure, arguing that it removes an important advantage as Rhode Island seeks to compete with neighboring Massachusetts. Even a limited exodus of top earners to other states could have a major economic effect, according to the chamber’s president, Laurie White. With a population just over 1 million, Rhode Island only has a few thousand residents who will be subject to the millionaire tax, she said.
“As the smallest state, we have a very fragile economy to begin with,” White said, adding that the chamber plans to prioritize legislation next session to repeal the tax.
Despite a recent revenue uptick, lawmakers backed the tax, with a spokesperson for Senate President Valarie Lawson calling higher taxes on the wealthy the “fairest approach to taxation.”
