The bill amends Chapter 44-30 of the General Laws regarding personal income tax by introducing a new section, 44-30-12.1, which establishes a simplified exemption from state income tax for small-scale Bitcoin transactions conducted by individuals and businesses based in Rhode Island. Under this new provision, any sale or exchange of Bitcoin will be exempt from state taxation if the total value of such transactions does not exceed five thousand dollars ($5,000) per month or twenty thousand dollars ($20,000) per taxable year. These transactions will not be included in the income calculations for state income or capital gains tax. Taxpayers may self-certify their eligibility for the exemption on their annual state income tax return.

The bill defines key terms related to Bitcoin and the exemption process, including "Bitcoin," "Business," "Individual," "Market value," and "Sale of Bitcoin." It requires individuals and businesses claiming the exemption to maintain reasonable records sufficient to verify that the total value of Bitcoin sales or exchanges within the taxable year does not exceed the annual exemption limit, with such records made available to the Department of Revenue upon request for audit purposes. The Department of Business Regulation is tasked with issuing plain-language guidance regarding the exemption, including examples of acceptable recordkeeping and valuation methods. This section is set to remain in effect until January 1, 2028, unless extended or amended by the General Assembly following a review of its fiscal and economic impact. The act is scheduled to take effect on January 1, 2027.