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4/8/2026
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Bill would create tax credit to encourage Rhode Islanders to invest in local small businesses
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STATE HOUSE – Sen. Bridget Valverde and Rep. Mary Ann Shallcross Smith have introduced legislation to help small businesses in Rhode Island grow while incentivizing Rhode Islanders to keep their investments local.
Their bill would create the Rhode Island Local Investment Tax Credit, which would provide Rhode Island taxpayers a refundable income tax credit of up to $3,000 for half their qualified investment in a local small business.
“Governments frequently woo big businesses with tax credits, and it’s time we do more for the small businesses that are the backbone of our communities. They inject dollars into their local economies, providing jobs, tax revenue, community spaces and innovation that stays in Rhode Island,” said Senator Valverde (D-Dist. 35, North Kingstown, East Greenwich, South Kingstown). “Encouraging Rhode Islanders to invest in small businesses in their own community is a way to multiply their investments’ positive effects. They aren’t only enabling a local business to grow and thrive; they are boosting their own community’s quality of life. They’re helping to provide jobs for local people who, in turn, spend their money locally. They’re contributing to their community’s tax base. They are strengthening the fabric of their own community, and our state should be actively encouraging this type of investment.”
Said Representative Shallcross Smith (D-Dist. 46, Lincoln, Pawtucket), “Small businesses face a tremendous number of challenges in the modern world, including access to the money they need to compete with larger corporations. But small, locally owned businesses are the businesses we should be supporting. They are our neighbors, they keep Main Street alive, they are sponsoring our Little League teams and they are contributing to what makes each community special. With this legislation, we’re creating a program that provides a new local funding source for them, benefiting both small businesses and the neighbors who invest in them, and creating stronger connections between those businesses and their neighbors.”
The legislation (2026-S 2833, 2026-H 8195) would allow the tax credit for half the value of a cash or cash equivalent investment, limited to $3,000 in any tax year, in a qualified business in which the investor and their family members have no ownership, employment or preexisting fiduciary relationship. The bill tasks the Rhode Island Commerce Corporation Strategic Fund with developing an application, approval process and parameters for certifying investments.
Qualified businesses must have no more than 99 employees and be headquartered and domiciled in Rhode Island, with a majority of employees working here, at least 80% of assets here and 80% of gross revenues coming from operations in the state.
The bill was developed in collaboration with Local Return, whose mission is to build community wealth in Rhode Island through ownership and investment, particularly in neighborhoods that have experienced historical disinvestment.
“We are so grateful to Sen. Valverde and Rep. Shallcross Smith for introducing this important legislation. The Rhode Island Local Investment Act is a way to increase access to capital for local, small and independently owned businesses. It would keep money flowing and multiplying in our economy, as Rhode Islanders move money from Wall Street to Main Street,” said Local Return President and co-Founder Jessica David.
Both bills have been assigned to their respective chambers’ Finance committees. The House Finance Committee is scheduled to hold a hearing on the House bill today at 4 p.m. in Room 35 on the basement level of the State House.
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903
(401) 222-1923
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