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Tool | October 2015

State-by-State Guide to Taxes on Retirees

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Rhode Island

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The Bottom Line
Map of Rhode Island

Least Tax-Friendly

One of Kiplinger's top ten least tax-friendly states for retirees, the Ocean State is tough on retirees. It taxes virtually all sources of retirement income, including pension income. But starting January 1, 2016, the income thresholds increase for when Social Security benefits will be taxed, which will lessen the tax burden for some retirees. Although it once had one of the highest tax rates in the nation, Rhode Island has dropped its top income tax rate from 9.9% to 5.99%. The Tax Foundation says Rhode Island's median real estate taxes, levied by cities and towns, are the tenth-highest in the U.S. But low-income seniors are eligible for modest property-tax relief from a state "circuit breaker" program.

State Sales Tax

7%. Groceries, most clothing and footwear, precious-metal bullion under some circumstances, and prescription drugs are exempt. Over-the-counter drugs such as aspirin are taxed, unless you have a prescription. The tax also applies to the portion of any individual sale of clothing and footwear that exceeds $250.

Income Tax Range

Low: 3.75% (on up to $60,500 of taxable income)

High: 5.99% (on taxable income over $137,650)

Social Security

For 2015, the state taxes benefits to the extent that benefits are federally taxed. But starting January 1, 2016, Rhode Island won't tax Social Security benefits for single filers with up to $80,000 in adjusted gross income and married filers with up to $100,000 in AGI.

Exemptions for Other Retirement Income

Railroad Retirement benefits are exempt, but there are no other retirement-income tax breaks (if Social Security benefits fall below the applicable thresholds, they're tax-free). Out-of-state government pensions are fully taxed. Individual pension income is generally taxable.


Taxable at ordinary income tax rates.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Taxable at ordinary income tax rates.

Private Pensions

Taxable at ordinary income tax rates.

Public Pensions

Taxable at ordinary income tax rates.

Property Taxes

Median property tax on Rhode Island's median home value of $232,300 is $3,872, according to the Tax Foundation.

Tax breaks for seniors: Homeowners 65 and older who earn $30,000 or less can get a state tax credit of up to $305 under the statewide property-tax relief program. Cities or towns may offer a property tax exemption or similar property tax break for seniors or veterans. 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.

Inheritance and
Estate Taxes

Rhode Island has an estate tax with a maximum rate of 16%. The Rhode Island estate tax threshold is $1,500,000 for 2015; the exemption is indexed for inflation going forward.


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