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Official Tax Guide

Rhode Island Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Rhode Island state taxes. Income tax (3.75% - 5.99%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

Rhode Island State Tax Guide 2025

Welcome to Rhode Island! As you prepare for your move to the Ocean State, it is important to understand the tax landscape. Rhode Island generally has higher-than-average tax burdens compared to the rest of the United States, particularly regarding property and income taxes.

This guide provides a general overview of the tax structure for 2025. Always consult with a tax professional for advice specific to your financial situation.

1. Income Tax

Rhode Island utilizes a progressive personal income tax system. This means that your tax rate increases as your income rises. It is not a flat tax.

Tax Brackets (2025)

While specific brackets are adjusted periodically for inflation, Rhode Island generally maintains three marginal tax brackets. Based on the statutory range of 3.75% to 5.99%, the structure typically looks like this:

  • Lowest Bracket: Applies to the first tier of taxable income (up to a specific threshold).
  • Middle Bracket: Applies to income above the first threshold.
  • Highest Bracket: Applies to income exceeding the upper threshold (capped at 5.99%).

Note: Tax brackets are applied progressively. You do not pay the top rate on your entire income—only on the portion that falls within the highest bracket.

Filing Status

Rates vary slightly depending on your filing status (Single, Married Filing Jointly, Head of Household, etc.). The threshold for when the top rate kicks in is generally higher for married couples filing jointly than for single filers.

2. Sales Tax

Rhode Island has a statewide sales tax, though local municipalities generally do not add additional sales taxes on top of the state rate.

  • State Sales Tax Rate: 7%
  • Local Taxes: Unlike many states, Rhode Island does not permit cities or towns to levy additional local sales taxes. Therefore, the sales tax rate is uniform across the state.

Taxable Goods and Services

The 7% tax applies to most retail goods. Services are generally exempt unless they are specifically deemed taxable (such as certain installation or repair services).

Common Exemptions:

  • Clothing (under $250 per item).
  • Prescription medications.
  • Groceries (unprepared food).

3. Property Tax

Property taxes in Rhode Island are levied by local governments (cities and towns) to fund schools, police, and municipal services. These rates vary significantly depending on the municipality.

  • General Context: Rhode Island consistently ranks among the states with the highest property tax burdens in the U.S.
  • Effective Tax Rate: While rates are expressed as a percentage of assessed value, the effective rate (total tax paid divided by market value) often ranges from 1.0% to 2.0%, though some cities may be higher.
  • Assessment: Homes are assessed at 100% of their fair market value.

Common Exemptions:

  • Homestead Exemption: Available to owner-occupied primary residences, this reduces the taxable value of the home.
  • Senior Exemption: Additional exemptions are often available for seniors (usually age 65+) based on income limits.

4. Other Taxes

Gas Tax

Rhode Island imposes a tax on gasoline and diesel fuel. As of 2025, the state gas tax is included in the price per gallon at the pump. The rate is subject to inflationary adjustments but generally hovers around 35 cents per gallon.

Sin Taxes (Tobacco & Alcohol)

  • Cigarettes: A specific excise tax per pack (historically among the highest in the nation).
  • Alcohol: State excise taxes apply to beer, wine, and spirits. Liquor is sold exclusively through state-run package stores (though private stores can sell beer and wine).

Inheritance/Estate Tax

Rhode Island is one of the few states that still levies an Inheritance Tax.

  • Who Pays: The beneficiary pays the tax based on their relationship to the deceased.
  • Exemptions: Immediate family members (spouses, children, parents) are often exempt or taxed at a lower rate. More distant relatives and non-relatives face higher tax rates.
  • Estate Tax: Rhode Island also has a separate estate tax with an exemption threshold (often aligned with federal pre-2017 levels, adjusted for inflation).

5. Retiree Taxes

If you are moving to Rhode Island for retirement, consider how your income will be taxed:

  • Social Security Benefits: Fully exempt from state income tax if your federal Adjusted Gross Income (AGI) falls below certain thresholds. If your AGI exceeds the limit, a portion of your benefit may be taxable.
  • Pensions and IRA Withdrawals: Generally taxable as ordinary income. However, there is a pension exemption for seniors (usually age 65+) based on income limits. If your total income is below the threshold, a portion or all of your pension income may be exempt.
  • 401(k) Distributions: Taxed as ordinary income.

6. Comparison to Neighbors

How does Rhode Island compare to its New England neighbors?

  • vs. Massachusetts:
    • Income Tax: RI has a top rate of 5.99%; MA has a flat rate (historically 5.0%).
    • Sales Tax: Both are similar (RI 7%, MA 6.25%).
    • Property Tax: Generally lower in RI than in Eastern MA (Boston suburbs).
  • vs. Connecticut:
    • Income Tax: CT has a top rate of 6.99% (higher than RI).
    • Sales Tax: RI is 7%; CT is 6.35%.
    • Property Tax: Both states have high property taxes, often comparable.
  • vs. Massachusetts (Cape Cod/SE MA):
    • RI is often considered a tax-friendly alternative for retirees looking to escape the higher cost of living and property taxes found in parts of Eastern Massachusetts.

Disclaimer

Tax laws are subject to change and vary by individual circumstances. The information provided in this guide is for educational purposes only and should not be considered legal or financial advice. We strongly recommend consulting with a Certified Public Accountant (CPA) or tax attorney for assistance with your specific tax filing requirements.