Bottom Line
Middle-Class Families: Not Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Not Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)
Residents of the Ocean Tax are drowning in property taxes. The statewide median property tax rate in Rhode Island is the 10th-highest in the U.S.
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Income taxes in Rhode Island are generally "average" when compared to other states, but seniors pay tax on their Social Security benefits if their federal adjusted gross is too high. Sales taxes in the state are actually a little below average. However, while Rhode Island's income and sales tax bites are modest, they can't pull the state out of the "not tax-friendly" category.
Plus, Rhode Island has an estate tax (it's also one of only three states that tax estates worth less than $2 million).
Rhode Island Income Taxes
Rhode Island Income Tax Range
Low: 3.75% (on up to $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 a federal adjusted gross income of $111,200 or less, single and head-of-household filers with federal AGI of $88,950 or less, and married taxpayers filing a separate return with a federal AGI of $88,975 or less (thresholds for the 2022 tax year are not available yet). For taxpayers exceeding these thresholds, Social Security benefits are taxed by Rhode Island to the same extent they are taxed at the federal level.
Rhode Island Tax Breaks 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, federal adjusted gross income cannot exceed $109,050 for joint filers and qualifying widow(er)s, $87,200 for single and head-of-household filers, or $87,225 for married people filing separate returns (thresholds for the 2022 tax year are not available yet).
Beginning in 2023, military retirement income is exempt from tax. However, this exemption and the general retirement plan exemption can't exceed the amount of military retirement income received in the tax year.
Railroad Retirement benefits are fully exempt.
Rhode Island Sales Tax
7% state levy. No local taxes.
- Groceries: Exempt
- Clothing: Exempt if under $250
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Rhode Island Real Property Taxes
In Rhode Island, the median property tax rate is $1,571 per $100,000 of assessed home value.
Rhode Island Property Tax Breaks for Retirees
For the 2022 tax year, homeowners 65 and older with household income 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 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.
Rhode Island Motor 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 $0.50 per cigar cap
Other tobacco products: 80% of the wholesale price
Beer: $0.11 per gallon
Wine: $1.40 per gallon
Liquor: $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 Inheritance Taxes
Rhode Island has an estate tax with a 2022 exemption amount of $1,648,611. Rates range from 0.8% to 16%.
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