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 allows 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: up to $100,000 for converting to a worker-owned cooperative or an employee-ownership trust, up to $100,000 for an employee stock ownership plan, and up to $25,000 for an alternate equity structure. Additionally, it provides credits for expansion costs incurred by qualified employee-owned businesses, allowing up to $25,000 for expanding their employee ownership trust, employee stock ownership program, worker-owned cooperative, or alternate equity structure, contingent upon expanding by at least 20% of total ownership.

The bill details the procedures for applying for the tax credit, requiring businesses to submit applications to the Rhode Island Department of Revenue for a tax credit certificate. The maximum aggregate amount of tax credit certificates that can be issued in any single income tax year is capped at $1,000,000. The act is designed to promote employee ownership and provide income tax relief for businesses and individuals, taking effect upon passage.