The proposed bill introduces the "Rhode Island Local Investment Tax Credit Act," which aims to provide an investment tax credit to taxpayers who make qualified investments in local qualified businesses that employ ninety-nine (99) or fewer employees. The credit allows taxpayers to claim fifty percent (50%) of their qualified investment, capped at three thousand dollars ($3,000) per qualified business and per tax year. To qualify, investments must be certified by the Rhode Island commerce corporation strategic fund, which is responsible for developing an application and approval process for these investments.

The act specifies that qualified businesses must have their headquarters in Rhode Island, receive at least eighty percent (80%) of their gross revenues from operations within the state, and maintain at least eighty percent (80%) of their assets in the state. Additionally, the act prohibits investments in businesses where a family member of the investor is an employee or owner, or where the investor has a preexisting fiduciary relationship.

The Rhode Island commerce corporation strategic fund will issue a certificate to taxpayers claiming the credit, which must be attached to their annual tax return. If the credit exceeds the taxpayer's tax liability for the year, the excess may be carried forward for up to ten (10) tax years.

Furthermore, the bill mandates that the General Assembly will annually appropriate sufficient funds from the state general fund to fully compensate for any loss of revenue resulting from the tax credits granted under this act. The act is designed to encourage local investment and support small businesses in the state, and it will take effect upon passage.