State-by-State Guide to Taxes on Retirees
Tool | December 2020

Rhode Island State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

Rhode Island

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The Bottom Line
Flag of Rhode Island

Not Tax-Friendly

High-earners won't find the Ocean State amenable for retirement. On the income tax front, seniors pay tax on their Social Security benefits if their federal adjusted gross is too high. Wealthier retirees also miss out on a state income tax exemption for payouts from private, government, or military retirement plans.

The property tax news isn't any better. The statewide median property tax rate in Rhode Island is the 10th-highest in the U.S. Homeowners 65 and older who earn $30,000 or less can get a state tax credit, though. Local governments in Rhode Island can also offer a property tax exemption or similar property tax break for senior citizens.

Retirees will also want to know that sales taxes in the state are average and Rhode Island has an estate tax (it's also one of only three states that tax estates worth less than $2 million).

Income Tax Range

Low: 3.75% (on up to $65,250 of taxable income)

High: 5.99% (on taxable income over $148,350)

Taxation of Social Security Benefits

For 2020, Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $107,950 or less, single and head-of-household filers with federal AGI of $86,350 or less, and married taxpayers filing a separate return with a federal AGI of $86,375 or less. For taxpayers exceeding these thresholds, Social Security benefits are taxed by Rhode Island to the same extent they are taxed at the federal level.

Tax Breaks for Other Retirement Income

Taxpayers who have reached full retirement age can exclude up to $15,000 of income from private, government, or military retirement plans (not including IRAs). Federal adjusted gross income cannot exceed $105,850 for joint filers and qualifying widow(er)s or $84,700 for other taxpayers (2020 amounts).

Railroad Retirement benefits are fully exempt.

Sales Tax

7% state levy. No local taxes.

Groceries: Exempt
Clothing: Exempt if under $250
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

In Rhode Island, the median property tax rate is $1,533 per $100,000 of assessed home value.

Homeowners 65 and older with household income of $30,000 or less can get a state income tax credit of up to $400 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 can offer a property tax exemption or similar property tax break for seniors.

Cities and towns can also create a property tax credit of up to $1,500 for people at least 60 years old who provide volunteer services for the city or town. The credit must be calculated by multiplying the number volunteer hours by the state minimum wage.

Annual Car Taxes and Fees

An annual vehicle excise tax based on the car's value is imposed.

Estate and Inheritance Taxes

Rhode Island has an estate tax with a 2021 exemption amount of $1,595,156. Rates range from 0.8% to 16%.

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