Tool | November 2017

State-by-State Guide to Taxes on Retirees

Rhode Island

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The Bottom Line
Map of Rhode Island

Tax Unfriendly

The Ocean State has been tough on retirees, but the state has been making moves in recent years to become friendlier. The Ocean State has taxed virtually all sources of retirement income, including pension income. But as of 2016, the income thresholds increase for when Social Security benefits will be taxed, which will lessen the tax burden for some retirees. And starting in 2017, a new state income tax exemption for retirees took effect; up to the first $15,000 of income will be exempt for retirees who meet certain income thresholds. 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%. Low-income seniors are eligible for modest property-tax relief from a state "circuit breaker" program.

State Sales Tax

7% state levy. No local taxes. Clothing and footwear with an item price of $250 or less are exempt.

Income Tax Range

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

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

Effective income tax rate: 3.8%/individual, 4.25%/joint

Social Security

Rhode Island doesn't tax Social Security benefits for single filers with up to $80,000 in adjusted gross income and joint filers with up to $100,000 in AGI.

Exemptions for Other Retirement Income

Railroad Retirement benefits are exempt, and if Social Security benefits fall below the applicable thresholds, they're tax-free. The first $15,000 of other retirement income, including private or public pensions, is exempt from state income taxes for retirees who have reached full Social Security retirement age and who have income of up to $80,000 for single filers and up to $100,000 for joint filers.

IRAs

Eligible for exemption.

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

Eligible for exemption.

Private Pensions

Eligible for exemption.

Public Pensions

Eligible for exemption.

Property Taxes

The median property tax on Rhode Island's median home value of $236,000 is $3,855.

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 an exclusion level that's indexed to inflation (the 2017 threshold is $1,515,156). Rates range from 0.8% - 16%. There is no inheritance tax.