Rhode Island Tax Rates

This post provides an overview of the primary taxes levied at the state level in Rhode Island. The state is notable for its high sales tax rate with no local additions and a high effective property tax rate. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Rhode Island utilizes a graduated state individual income tax system with three tax brackets.

  • State Rates (2024 Tax Year): The rates range from a low of 3.75% to a top marginal rate of 5.99%.
    • The 5.99% rate applies to taxable income over $176,050 for all filers.
  • Tax Structure: The tax rates are the same for all filing statuses (Single, Married Filing Jointly, etc.), making the system simpler than many states.
  • Local Income Tax: Rhode Island does not impose a local or county income tax.
  • Retirement Income: Social Security benefits are not taxable in Rhode Island. The state offers subtractions for certain military and non-military pension income, subject to income thresholds and age requirements.

Sales and Use Tax

Sales tax is a significant source of state revenue, and Rhode Island has one of the highest state sales tax rates in the nation.

  • State Rate: The general state sales tax rate is a uniform 7.00% on the retail sale of most tangible personal property and certain services.
  • No Local Sales Tax: Rhode Island does not permit local or county general sales taxes. Therefore, the combined state and local sales tax rate is uniformly 7.00% across all jurisdictions.
  • Exemptions: Key exemptions include groceries (unprepared food for home consumption), prescription drugs, and most clothing and footwear.
  • Specific Excise Taxes: The state imposes a 1% local meals and beverage tax and a 6% state hotel tax (increasing to 7% total for the state portion in 2026) on lodging and short-term rentals, on top of the general 7.00% sales tax.
  • Use Tax: A state use tax of 7.00% is imposed on goods purchased outside of Rhode Island but used, stored, or consumed in the state if state sales tax was not collected.

Property Tax (Ad Valorem Tax)

Property taxes in Rhode Island are collected exclusively at the local level by municipalities, and they are generally above the national average effective rate.

  • Assessment: Property is assessed at its full and fair cash value (market value) or at a uniform percentage thereof, not to exceed 100%. Tax assessments are typically updated through revaluation or statistical revaluation at least once every three years.
  • Tax Calculation: The tax is determined by applying the local mill rate (set by local city and town councils) to the assessed value.
  • Property Tax Cap: Municipalities are subject to a property tax cap that limits the annual increase in the total local tax levy, providing some stability.
  • Exemptions: Many towns offer a Homestead Exemption to reduce the taxable portion of a home’s assessed value if it is the primary residence, as well as exemptions for seniors and veterans.

Corporate Income Tax (Corporate Tax)

Rhode Island imposes a flat rate corporate income tax on corporations doing business in the state.

  • Tax Rate: The corporate income tax rate is a flat 7.0% of the corporation’s Rhode Island taxable net income.
  • Minimum Tax: All corporations with Rhode Island business activity are subject to a minimum tax.
  • Combined Reporting: Rhode Island is a combined reporting state, requiring affiliated groups of corporations to calculate their taxable income on a unitary basis.
  • Apportionment: For multi-state C corporations, Rhode Island uses a Single Sales Factor apportionment formula with market-based sourcing.

Unique and Miscellaneous Taxes

  • Estate Tax: Rhode Island is one of the few states that imposes a state estate tax (not an inheritance tax). The tax is levied on the estate’s gross value if it exceeds a threshold that is adjusted annually for inflation (e.g., approximately $1.8 million for deaths in 2025).
  • Real Estate Conveyance Tax: The state imposes a transfer tax on the conveyance of real estate, which is currently set at $2.30 per $500 of the purchase price, with plans to increase this rate in late 2025.
  • Cigarette Tax: The state imposes a high excise tax on cigarettes, currently set at $4.50 per pack of 20 cigarettes.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.