McKee proposes plan to eliminate Rhode Island tax on Social Security benefits

NEWPORT, R.I. — A Social Security tax elimination plan proposed by Dan McKee would phase out the state tax on Social Security benefits over the next several years, including for early retirees.

McKee unveiled the proposal Monday at the Edward King House as part of his broader affordability agenda.

Plan would expand eligibility before full repeal

Under current law, Rhode Islanders must reach full retirement age to qualify for a tax exemption on Social Security income.

The governor’s proposal would remove that restriction and gradually expand eligibility through a three year rollout:

• 2027: Eliminate the age requirement
• 2028: Increase income thresholds to $165,200 for individuals and $206,550 for joint filers
• 2029: Expand the exemption further to eliminate the tax entirely

Cost expected to rise over time

The proposal is expected to cost about $3 million in its first year, with the annual impact growing to approximately $60 million once the tax is fully eliminated.

Focus on affordability

McKee said the goal is to reduce financial strain on retirees who have already paid into the system throughout their working lives.

Supporters argue the change would make Rhode Island more affordable for older residents and help keep retirees in the state.

The Social Security tax plan is included in McKee’s proposed 2027 budget.