Middle class families: Not Tax Friendly (Go to Kiplinger Tax Card for Middle Class Families)
Retired: Not tax-friendly (Go to Kiplinger tax card for retirees)
Residents of Ocean Tax are drowning in property taxes. Rhode Island’s statewide median property tax rate is the 10th highest in the United States
Income taxes in Rhode Island are generally “average” compared to other states, but seniors pay taxes on their Social Security benefits if their adjusted federal gross income is too high. Sales taxes in the state are actually a little lower than average. However, although Rhode Island’s income and sales taxes are modest, they cannot move the state out of the “non-tax friendly” category.
Additionally, Rhode Island has an estate tax (it is also one of only three states that tax estates worth less than $2 million).
Rhode Island Income Taxes
Rhode Island Income Tax Range
Down: 3.75% (on a maximum of $68,200 of taxable income)
High: 5.99% (on taxable income over $155,050)
Rhode Island Taxation of Social Security Benefits
For 2021, Social Security benefits are not taxed for joint filers with an adjusted federal gross income of $111,200 or less, single filers and heads of households with a federal AGI of $88,950 or less, and married taxpayers who file a separate return with a federal AGI. $88,975 or less (thresholds for the 2022 tax year are not yet available). For taxpayers above these thresholds, Social Security benefits are taxed by Rhode Island to the same extent as they are taxed federally.
Rhode Island Tax Relief for Other Retirement Income
Taxpayers who have reached full retirement age can exclude up to $15,000 of income ($20,000 starting in 2023) from private, government, or military retirement plans (not including IRAs). For the 2021 tax year, adjusted federal gross income cannot exceed $109,050 for co-filers and qualifying widows/widowers, $87,200 for single filers and heads of households, or $87,225 for married persons filing separate returns (thresholds for the 2022 tax year are not yet available).
From 2023, military retirement income is tax exempt. However, this exemption and the exemption from the general pension scheme cannot exceed the amount of military retirement income received during the tax year.
Railway pension benefits are fully exempt.
Rhode Island Sales Tax
7% state levy. No local taxes.
- Races: Exempt
- Clothes: Exempt if under $250
- Motor vehicles: Taxable
- Prescription drugs: Exempt
Rhode Island Property Taxes
In Rhode Island, the median property tax rate is $1,571 per $100,000 of estimated property value.
Rhode Island Property Tax Relief for Retirees
For the 2022 tax year, homeowners 65 and older with household incomes of $35,000 or less can get a state income tax credit of up to $600 for property tax relief. To qualify for the credit, you must have been a full-time resident of Rhode Island for the entire tax year and you must be current on your property tax payments. Cities and towns may offer a property tax exemption or similar property tax relief for seniors.
Cities and towns can also create a property tax credit of up to $1,500 for people age 60 or older who provide volunteer services to the city or town. The credit should be calculated by multiplying the number of volunteer hours by the state minimum wage.
Rhode Island Fuel Taxes
Gasoline: 35¢ per gallon.
Diesel: 35¢ per gallon.
Rhode Island Sin Taxes
Cigarettes and little cigars: $4.25 per pack
Snuff: $1 per ounce
Cigars: 80% of the wholesale price with a capsule of $0.50 per cigar
Other tobacco products: 80% of the wholesale price
Beer: $0.11 per gallon
Wine: $1.40 per gallon
Alcohol: $5.40 per gallon
Alcohol purchases are exempt from sales tax.
Marijuana: Effective December 1, 2022, 10% state excise tax, 3% local excise tax, plus general sales tax
Rhode Island Estate and Estate Taxes
Rhode Island has an estate tax with an exemption amount of $1,648,611 in 2022. Rates range from 0.8% to 16%.