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Taxes in Rhode Island
From high property taxes and an estate tax on larger estates to expanding retirement income exemptions, Rhode Island offers some relief for retirees but still carries a relatively heavy overall tax burden.
Updated:
At a glance:
- Rhode Island has a 5.99% top income tax rate and a 7% sales tax, with several everyday essentials like groceries and medication exempt.
- Property taxes are among the higher in the nation, averaging 1.23%, though new retirement income deductions provide some relief.
- Retirees can exclude up to $25,000 of retirement income, but estates over $1.8 million are subject to an estate tax of up to 16%.
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 | $0.38 per gallon |
| Diesel Tax | $0.38 per gallon |
| Cigarette Tax | $4.25 per pack |
| Income Tax | 5.99% |
| Effective Tax Rate | 4.75% |
| Property Tax | 1.23% |
| Social Security Tax | Partial |
| Medical/Dental Deduction | None |
| Federal Income Tax Deduction | None |
| Retirement Tax | Partial |
Rhode Island Tax Rates 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 Tax
Top rate of 5.99% (on taxable income over $181,650).
Rhode Island Property Taxes
Rhode Island’s average effective property tax rate is 1.23%, and some rural communities also collect fire district taxes. The median-value Rhode Island home is $470,000 , which would incur $5,781 in taxes annually.
For tax years beginning on or after January 1, 2025, residents can exclude up to $25,000 of their federally taxable retirement income from pensions, annuities, and 401(k) plans from state taxable income, up from $20,000 in 2023. Also, taxpayers can subtract any military service pension benefits. Out-of-state government pensions are fully taxed.
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 Inheritance and Estate Taxes
Rhode Island’s estate tax rate is as high as 16% imposed on estate values over $1.8 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.