The proposed bill establishes a new chapter in Title 44 of the General Laws, titled "Employee Ownership Tax Credit," aimed at incentivizing businesses to transition to employee ownership structures. It defines key terms such as "alternate equity structure," "conversion costs," "expansion costs," "qualified business," and "qualified employee-owned business." The bill outlines the eligibility criteria for businesses to qualify for the tax credit, allowing qualified businesses to receive a tax credit of up to 50% of their conversion costs, with specific caps depending on the type of ownership structure they are transitioning to, including worker-owned cooperatives and employee stock ownership plans.

Specifically, the tax credit allows for up to $100,000 for conversion costs related to worker-owned cooperatives or employee-ownership trusts, up to $100,000 for employee stock ownership plans, and up to $25,000 for alternate equity structures. Additionally, it provides credits for expansion costs incurred by qualified employee-owned businesses, capped at $25,000, contingent upon expanding employee ownership by at least 20%.

The bill details the procedures for applying for the tax credit, including the development of guidelines by the Rhode Island Department of Revenue, which will oversee the certification process. Businesses must submit applications to receive tax credit certificates, and the total amount of tax credits issued in any single tax year is capped at $1 million. The act is set to take effect upon passage, with the tax credits applicable for income tax years starting from January 1, 2026, to January 1, 2029.