Taxation in Rhode Island
Rhode Island has a 7% sales tax rate that applies to retail sales of goods and services, with exemptions for certain items like most food, prescription drugs, newspapers, and clothing. The rate has increased twice since the 1970s, initially as temporary measures but later made permanent.
Rhode Island also has high property taxes, ranking 10th highest nationally, with an average effective rate of 1.53%. Some cities offer property tax credits to qualifying elderly homeowners, with West Greenwich having the state’s highest property tax rate at 24.51%. Household income limits determine eligibility for these credits.
Sales Tax and Property Taxes
- The standard sales tax rate in Rhode Island is 7% on applicable goods and services.
- Property tax rates and calculations vary depending on location and assessed property value.
Taxes on Specific Items and Activities
- An out-of-state retailer with affiliate nexus in Rhode Island must collect and remit sales tax.
- Excise tax is applied to vehicle registrations based on value.
- Rhode Island imposes an excise tax of $5.40 per gallon on all liquor sold.
- Sales tax on vehicles is 7% of the purchase price minus allowances.
Other Tax Information
- Rhode Island businesses are subject to the Business Tangible Personal Property Tax.
- Child tax credits, standard deductions, and tax brackets have been adjusted for 2023.
- Rhode Island processes Personal Income Tax, State Unemployment Insurance Tax, and Temporary Disability Insurance Tax in addition to federal taxes.