State-by-State Guide to Taxes on Retirees - Rhode_Island
Tool | November 2019

State-by-State Guide to Taxes on Retirees

Rhode Island

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The Bottom Line
Flag of Rhode Island

Least Tax-Friendly

High-earners won’t find the Ocean State amenable for retirement. On the income tax front, seniors pay tax on their Social Security benefits if their federal adjusted gross income tops $85,150 ($106,400 for joint filers). Higher-income seniors also miss out on a state income tax exemption on payouts from private, government, or military retirement plans.

The state-wide average property tax rate in Rhode Island is the 11th-highest in the U.S. As a result, the owner of a $400,000 home in the state forks out about $6,892 per year in real property taxes. Homeowners 65 and older who earn $30,000 or less can get a state tax credit, though. Local governments in Rhode Island can also offer a property tax exemption or similar property tax break for senior citizens.

The Rhode Island estate tax is another thing retirees need to worry about. The rate can be as high as 16%, and the tax applies to 2019 estates worth $1,561,719 or more (the threshold is adjusted each year for inflation). That makes Rhode Island one of only three states that tax estates worth less than $2 million.

State Sales Tax

7% state levy. No local taxes. Clothing and footwear priced at $250 or less are exempt.

Income Tax Range

Low: 3.75% (on up to $62,250 of taxable income)

High: 5.99% (on taxable income over $149,150)

Social Security

Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $104,450 or less and other taxpayers with a federal AGI of $83,550 or less. For taxpayers exceeding these thresholds, Social Security benefits are taxed by Rhode Island to the same extent they are taxed at the federal level. (Since 2019 threshold amounts have not yet been released, the dollar amounts shown are for the 2018 tax year.)

Exemptions for Other Retirement Income

Taxpayers who have reached full retirement age can exclude up to $15,000 of income from private, government, or military retirement plans (not including IRAs). Federal adjusted gross income cannot exceed $83,450 for single filers, $104,350 for joint filers, or $83,475 for married taxpayers filing a separate return.

Railroad Retirement benefits are fully exempt.

Property Taxes

In Rhode Island, residents pay an average $1,723 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: Homeowners 65 and older who earn $30,000 or less can get a state tax credit of up to $385 under the statewide property-tax relief program. Cities or towns may offer a property tax exemption or similar property tax break for seniors or veterans. To qualify for the credit, you must have been a full-time resident of Rhode Island for the entire tax year, and you must be current on your property tax payments.

Vehicle Taxes

The 7% state sales tax is applied. Rhode Island is moving to phase out its unpopular annual car tax, which has widely varying rates set by municipalities. Residents will see their bills go down as the state exempts more taxable value each year until 2024, when the tax completely disappears.

Inheritance and Estate Taxes

Rhode Island has an estate tax with an exclusion level that’s indexed to inflation (the 2019 threshold is $1,561,719). Rates range from 0.8% - 16%.

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