Sales tax break for R.I. pickup truck trade-ins scrapped from FY 24 budget

Bad news for Rhode Island pickup truck owners who are looking to upgrade or swap out their vehicles: Lawmakers have axed the truck trade-in tax break from the fiscal 2024 budget first set forth by Gov. Dan McKee. 

The proposal would have given pickup truck owners a tax discount on their purchase of a new or used vehicle equal to the sales tax on the value of the truck they are trading in. For example, someone trading in a 2019 Ram Bighorn valued at $40,000 to buy a new truck selling for $60,000 would pay $1,400 in taxes based on the 7% tax rate applied to the truck they are trading in. Without the tax discount, their tax bill would be $4,200 for the same transaction.

McKee framed the tax break as a matter of fairness, since the same tax discount already applies to car and motorcycle trade-ins. It also would have made Rhode Island more competitive with Massachusetts, which offers trade-in tax allowances for trucks.

House Speaker K. Joseph Shekarchi in an emailed statement on Tuesday cited a lack of support from the Democratic caucus as the reason why the proposal was cut from the budget.

“This was a policy decision made to prioritize putting more money in the budget into education and housing, which were much higher priorities,” Shekarchi said.

He also stressed the need for a balanced budget that accounts for lower-than-expected tax revenue and a projected slowdown in revenue growth.

The tax break would have cost the state $3.7 million in tax revenue for fiscal 2024, based on Oct. 1 start date, with a $5 million loss in tax income for subsequent, full fiscal years.

The $14.0 billion budget unveiled by legislators is not final; the Rhode Island House of Representatives will take up the tax-and-spend plan on June 9.