McKee proposes phasing out tax on Social Security benefits in RI

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PROVIDENCE, R.I. (WPRI) — Gov. Dan McKee is proposing a plan to eliminate Rhode Island’s tax on Social Security benefits, including for early retirees.

McKee highlighted the proposal during an event at the Edward King House senior center in Newport on Monday, as part of his “Affordability for All” agenda.

“Many people here have been paying taxes—specifically Social Security taxes—for their whole careers,” McKee said. “When those hard-working people retire, is it fair that they should have those earnings taxed all over again?”

Under current law, a beneficiary must reach full retirement age to qualify for an exemption. McKee is proposing a three-year plan to phase out the state’s tax entirely.

In 2027, the age requirement (currently 67) would be eliminated, expanding eligibility to about 9,200 people who collect benefits early or qualify through disability or survivor programs.

In 2028, it would raise income limits to $165,200 for single filers and $206,550 for joint filers, helping another 11,600 residents.

By 2029, the exemption would extend to higher earners, fully ending the tax on Social Security benefits in Rhode Island.

The change would cost about $3 million initially, growing to roughly $60 million per year once fully implemented.

In his FY2027 budget proposal, McKee also called for a “millionaire tax,” adding a 3% income tax on Rhode Islanders earning more than $1 million annually.

MORE: McKee’s $14.9B budget plan seeks new 3% tax on millionaires, rollback of climate costs

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