Bill review: Rhode Island EITC Increase (RI S2364)

[PavelMakarchuk]

Bill Review: Rhode Island EITC Increase (S2364)

Reform ID: ri-s2364 | State: RI
Bill text: https://webserver.rilegislature.gov/BillText/BillText26/SenateText26/S2364.pdf
Description: Increases Rhode Island's earned-income tax credit from 16% to 30% of the federal earned-income credit, effective for tax years beginning on or after January 1, 2027.

Merging this PR will publish the bill to the dashboard.

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What we model

Provision	Parameter	Current	Proposed	Bill Reference
Rhode Island EITC Match Rate	gov.states.ri.tax.income.credits.eitc.match	16% of federal EITC	30% of federal EITC	SECTION 1, amending §44-30-2.6(c)(2)(N)(1)

What we don't model

• No other provisions in this bill — it is a single-parameter change

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Validation

External estimates

Source	Estimate	Period	Link
No official fiscal note	N/A	—	Bill introduced Jan 30, 2026; no fiscal analysis yet
EPI (Economic Progress Institute)	~$30M incremental (economic impact)	Annual	EPI Report

Note: No official fiscal note has been published by the RI Office of Revenue Analysis as of the encoding date. The EPI figure ($64.2M total at 30%, ~$30M more than current 16% rate) represents economic impact, not direct fiscal cost — it includes a local spending multiplier (~1.5–2x) commonly applied in EITC studies. Dividing by a typical ~1.6x multiplier yields an implied direct fiscal cost of ~$18.8M, which aligns closely with PE's estimate.

Back-of-envelope check

EITC match rate increase (16% → 30% = +14pp of federal EITC):
RI EITC claimants (TY2024, IRS): 68,800
Average federal EITC per RI return: $2,644
Current state credit per claimant: $2,644 × 16% = $423
Proposed state credit per claimant: $2,644 × 30% = $793
Incremental cost per claimant: $370
Total incremental cost: 68,800 × $370 = **$25.5M/year**

Sensitivity: Using historical average of 83,000 claimants → **$30.7M/year**

PE vs External comparison

Source	Estimate	vs PE	Difference
PE (PolicyEngine)	-$18.8M	—	—
EPI (implied direct cost, ~$30M / 1.6x multiplier)	~-$18.8M	~0%	Excellent
Back-of-envelope (IRS claimant data)	-$25.5M	-26.3%	Review range
Back-of-envelope (historical avg)	-$30.7M	-38.8%	Review range

Verdict: PE estimate (-$18.8M) aligns closely with EPI's implied direct fiscal cost (~$18.8M after removing the ~1.6x economic multiplier from their $30M incremental figure). The back-of-envelope is higher (-$25.5M to -$30.7M) because it uses raw IRS claimant counts and average federal EITC amounts without adjusting for: (1) PE's Enhanced CPS microdata capturing fewer EITC-eligible households in RI than IRS filing counts; (2) the nonrefundable cap reducing effective cost for some filers; (3) CPS-based income distribution differing from IRS filing data.

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Key results

Metric	Value
Revenue impact	-$18,781,087
Poverty rate	19.56% to 19.42% (-0.75%)
Child poverty rate	17.70% to 17.28% (-2.35%)
Winners	15.2%
No change	84.8%
Losers	0.0%

Decile impact

Decile	Relative Change	Avg Benefit
1	0.20%	$39
2	0.16%	$72
3	0.13%	$78
4	0.11%	$82
5	0.07%	$60
6	0.02%	$19
7	0.04%	$47
8	0.00%	$5
9	0.00%	$6
10	0.00%	$13

District impacts

District	Avg Benefit	Winners	Losers	Poverty Change
RI-1	$45	15.0%	0.0%	-1.09%
RI-2	$45	15.2%	0.0%	-0.43%

Parameter changes

Parameter	Period	Value	Bill Reference
gov.states.ri.tax.income.credits.eitc.match	2027-01-01+	0.30 (30%)	SECTION 1, amending §44-30-2.6(c)(2)(N)(1)

Data quality notes

• Uses PolicyEngine's Enhanced CPS microdata for Rhode Island, projected to tax year 2027
• RI has only 2 congressional districts, so district-level estimates have relatively large sample sizes
• 0% losers is expected — an EITC increase cannot reduce any filer's net income
• The EITC is fully refundable (100% of excess over tax liability), so all eligible filers benefit regardless of tax liability level

Reform parameters JSON

{
  "gov.states.ri.tax.income.credits.eitc.match": {
    "2027-01-01.2100-12-31": 0.30
  }
}

Versions

• PolicyEngine US: 1.484.2
• Dataset: policyengine-us-data v1.67.0
• Computed: 2026-02-17