RI H7504

Creates a new "Catastrophe Savings Account" allowing Rhode Island resident taxpayers to establish a regular savings or money market account to pay for qualified expenses resulting from governor-declared disasters, including windstorms, hurricanes, earthquakes, floods, tornadoes, and other catastrophic weather events.

Contributions to the account are tax-deductible, and all interest income earned on the account is exempt from state tax; distributions used for qualified catastrophe expenses (insurance deductibles and uninsured repair/replacement costs to a primary residence) are also excluded from taxable income.

Limits total contributions to $2,000 for taxpayers with deductibles of $1,000 or less, twice the deductible amount (up to $25,000) for those with deductibles above $1,000, and up to $250,000 (not exceeding fair market value of the home) for self-insured taxpayers.

Only one catastrophe savings account may be established per primary residence; excess contributions must be withdrawn and included in the taxpayer's taxable income for the year of withdrawal.

Upon a taxpayer's death, the account balance is included in the income of the person who receives it, unless that person is the surviving spouse; the act takes effect July 1, 2026, and applies to taxable years beginning on or after January 1, 2027.