Taxes in Rhode Island
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Like many New England states, property taxes in Rhode Island are high. But the state introduced a few tax reform laws that could benefit retirees in 2023 and thereafter. Below, we explain various Rhode Island state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
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Rhode Island Tax Rates
| State Sales Tax | 7% |
| Avg State/Local Sales Tax | 7% |
| Gas Tax | $0.34 per gallon |
| Diesel Tax | $0.34 per gallon |
| Cigarette Tax | $4.25 per pack |
| Income Tax | 5.99% |
| Effective Tax Rate: | 4.75% |
| Property Tax | 1.63% |
| Social Security Tax | Partial |
| Medical/Dental Deduction: | None |
| Federal Income Tax Deduction: | None |
| Retirement Tax | Partial |
Rhode Island State Taxes Explained
Rhode Island Sales Tax
7%. Groceries, some clothing, precious metal bullion, some burial-related items and prescription and over-the-counter drugs are exempt. The tax on clothing applies to each sale of apparel and footwear totaling more than $250.
Rhode Island Income Taxes
Top rate of 5.99% (on taxable income over $155,050).
Rhode Island Property Taxes
Rhode Island’s average effective property tax rate is 1.63%, and some rural communities also collect fire district taxes. The median-value Rhode Island home is $261,900, which would incur $4,271 in taxes annually.
Homeowners 65 and older who earn $30,000 or less can get a property tax relief credit. Local municipalities may offer a property tax exemption or property tax break for seniors or veterans who provide volunteer services. The exemption is based on hours volunteered.
Rhode Island Retirement Taxes
For tax years beginning on or after January 1, 2023, residents can exclude up to $20,000 of their federally taxable retirement income from pensions, annuities, and 401(k) plans from state taxable income, up from $15,000 in 2022. Also, taxpayers can subtract any military service pension benefits. Out-of-state government pensions are fully taxed.
Rhode Island Estate and Inheritance Taxes
Rhode Island’s estate tax rate is as high as 16% imposed on estate values over $1.7 million.
The gross value of an estate is determined by the combined total of cash, real estate, vehicles, certificates of deposit, investment accounts, life insurance proceeds, retirement accounts and personal property.
For further information, visit the Rhode Island Division of Taxation.