All You Need to Know About Rhode Island’s Taxes in One Place

Rhode Island has “average” income taxes, but seniors may pay tax on their Social Security benefits if their federal adjusted gross income is too high, based on The Kiplinger Washington Editors’ published report on October 18, 2022.

In 2022, eligible families will receive “Child Tax Rebate” payments of up to $750 per family. While the state has a below-average sales tax, it also has an estate tax, which makes it only one of three states to tax estates worth less than $2 million.

The income tax range in Rhode Island is 3.75% on the first $68,200 of taxable income and 5.99% on taxable income over $155,050. Social Security benefits are not taxed for those with a certain level of federal adjusted gross income, but for those exceeding these thresholds, the benefits are taxed by Rhode Island to the same extent as at the federal level.

Retirees 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). Military retirement income will be exempt from tax starting in 2023, and railroad retirement benefits are fully exempt.

Rhode Island has a 7% sales tax with exemptions for certain items, such as groceries and prescription drugs. The median property tax rate is $1,571 per $100,000 of home value. Senior citizens with low household incomes may be eligible for a property tax credit, and some cities and towns may offer additional property tax exemptions or credits to seniors or volunteers.

In Rhode Island, gasoline and diesel fuel are taxed at 35 cents per gallon, and there are sin taxes on cigarettes, snuff, cigars, other tobacco products, beer, wine, and liquor. Alcohol purchases are exempt from sales tax. Starting December 1, 2022, marijuana in the state will have a 10% state excise tax, a 3% local excise tax, and a general sales tax. The state also has an estate tax with an exemption amount of $1,648,611 and rates ranging from 0.8% to 16%.