Bill review: High-Earner Income Tax Surcharge (RI)

[DTrim99]

Bill Review: High-Earner Income Tax Surcharge

Reform ID: ri-h7313 | State: RI
Bill text: https://webserver.rilegislature.gov/BillText26/HouseText26/H7313.pdf
Description: Creates a 3% additional tax on Rhode Island taxable income exceeding $640,000 (in 2026 dollars), effective for tax years 2027 and thereafter, raising the effective top marginal rate from 5.99% to 8.99%.

Merging this PR will publish the bill to the dashboard.

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What we model

Provision	Parameter	Current	Proposed
High-Earner Surtax	gov.contrib.states.ri.high_earner_tax.in_effect	Not in effect	In effect (3% on income above $640,000)

Validation

External estimates

Source	Estimate	Period	Link
ITEP	$190M/year	Annual	Testimony
EPI	$190M/year (5,700 filers)	Annual	Testimony
Tax Foundation	Migration risk warning	-	Testimony

Back-of-envelope check

Top 1% (~6,100 filers), avg income ~$1.5M above threshold
3% × $1.5M × 6,100 = ~$275M (upper bound, assumes all income above threshold)
(Rough estimate — actual varies due to income distribution)

PE vs External comparison

Source	Estimate	vs PE	Difference
PE (PolicyEngine)	$426.5M	—	—
ITEP/EPI	$190M	+124%	⚠️ Review needed
Back-of-envelope	$275M	+55%	⚠️ Review needed

Verdict: PE estimate is significantly higher than external estimates (124% higher than ITEP/EPI).

Likely explanations for discrepancy:

1. CPS data may overrepresent ultra-high earners in Rhode Island small-state sample
2. PE uses 2027 projections with inflation-adjusted incomes; external estimates may use current-year data
3. Different definitions of taxable income vs AGI
4. External estimates may use more conservative assumptions about affected taxpayers

Parameter changes

Parameter	Period	Value	Bill Reference
gov.contrib.states.ri.high_earner_tax.in_effect	2027-01-01 to 2100-12-31	true	Section 1, amending R.I. Gen. Laws § 44-30-2.6
gov.contrib.states.ri.high_earner_tax.brackets[1].rate	2027+	0.03 (3%)	(Built into PE-US parameters)
gov.contrib.states.ri.high_earner_tax.brackets[1].threshold	2026 base	$640,000	(Built into PE-US parameters)

Key results

Metric	Value
Revenue impact	$426,538,301
Poverty rate	26.42% to 26.42% (0.0% change)
Child poverty rate	22.65% to 22.65% (0.0% change)
Winners	0.0%
Losers	1.5%

Decile impact

Decile	Relative Change	Avg Benefit
1	0.00%	$0
2	0.00%	$0
3	0.00%	$0
4	0.00%	$0
5	0.00%	$0
6	0.00%	$0
7	0.00%	-$0.10
8	0.00%	$0
9	0.00%	$0
10	-1.97%	-$16,934

District impacts

District	Avg Benefit	Winners	Losers	Poverty Change
RI-1	-$1,063	0.0%	2.0%	0.0%
RI-2	-$1,092	0.0%	2.0%	0.0%

Reform parameters JSON

{
  "_use_reform": "ri_high_earner_tax",
  "gov.contrib.states.ri.high_earner_tax.in_effect": {
    "2027-01-01.2100-12-31": true
  }
}

Versions

• PolicyEngine US: 1.591.1
• Dataset: policyengine-us-data 1.48.0
• Computed: 2026-03-19T14:23:11.082061+00:00

Data quality notes

• PE estimate ($426M) is 2.2x higher than external estimates (~$190M). This discrepancy should be investigated before publishing.
• The CPS sample for Rhode Island is relatively small, which may affect estimates for ultra-high earners.
• External estimates may use state tax return data which is more accurate for this income range.