The bill amends Section 44-5-2 of the General Laws regarding the levy and assessment of local taxes by introducing new provisions that allow cities and towns to exceed the maximum tax levy under specific conditions. Effective for tax assessments dated on or after December 31, 2025, the bill permits taxes levied on new housing units added to the municipal tax base during a fiscal year to exceed the maximum levy. This includes newly constructed residential properties, such as single-family homes, two-family homes, single-family attached structures, multi-family dwellings, mixed-use developments with at least fifty percent (50%) residential units, and existing buildings converted into residential housing units that meet zoning and building code requirements and increase the municipality's total housing stock.

To qualify for this exemption, a city or town must meet several criteria: (i) issue over ten (10) certificates of occupancy for new housing units during the fiscal year in which the exemption is sought; (ii) ensure that at least ten percent (10%) of the units in the development project are designated as low- or moderate-income housing; (iii) utilize the same valuation methods and rates for the new housing units as for similar units in the municipality; and (iv) implement a phased-in approach where the taxes levied on these qualifying new housing units may exceed the maximum levy only for the fiscal year in which the certificate of occupancy is issued and for two (2) subsequent fiscal years, with full taxes phased in by the fourth fiscal year following the issuance of the certificate of occupancy.

The act aims to provide municipalities with greater flexibility in managing their tax levies while ensuring compliance with established guidelines.

Statutes affected:
5793: 44-5-2
5793  SUB A: 44-5-2