Research Areas
Rhode Island
The Facts on Rhode Island’s Tax Climate
Last updated July 1, 2009
Here are some basic facts on Rhode Island’s tax system and how it compares to other states:
Tax Freedom Day Arrives on April 14 in Rhode Island
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Rhode Island taxpayers had to work until April 14 to pay their total tax bill, ranking it 10th highest in the nation, one day after national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states are: Connecticut, April 30 (ranked 1st nationally) and Massachusetts, April 16 (ranked 7th nationally).
Full study of Tax Freedom Day, nationwide and in each state
Rhode Island's State/Local Tax Burden Above National Average
Estimated at 10.2% of income, Rhode Island's state/local tax burden percentage ranks 10th highest nationwide, above the national average of 9.7%. Rhode Island taxpayers pay $4,533 per capita in state and local taxes.
Rhode Island's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
Rhode Island's 2010 Business Tax Climate Ranks 44th
Rhode Island ranks 44th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Connecticut (38th) and Massachusetts (36th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)
Rhode Island's Individual Income Tax System
Rhode Island's personal income tax system consists of five brackets and a top rate of 9.9%, kicking in at an income level of $372,950. Rhode Island's income tax system closely adheres to the federal income tax code. Among states levying personal income taxes, Rhode Island's top rate of 9.9% is the 5th highest nationally. Rhode Island's 2006 individual income tax collections were $958 per person, which ranked 17th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita
Rhode Island's Corporate Income Tax System
Rhode Island's corporate tax structure consists of a flat rate of 9% on all corporate income. Among states levying corporate income taxes, Rhode Island's rate ranks 7th highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $169 per capita, which ranked 22nd highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006
Rhode Island’s Sales, Gasoline and Cigarette Taxes among Nation's Highest
Rhode Island levies a 7% general sales or use tax on consumers, which is above the national median of 6%.State and local governments combined collect $803 per capita in general sales taxes in 2006, which ranks 28th highest nationally. Rhode Island's gasoline tax stands at 31 cents per gallon, which ranks 12th highest nationally. Rhode Island's cigarette tax stands at $3.46 per pack of twenty and is the nation's highest. The sales tax was adopted in 1947, the gasoline tax in 1925 and the cigarette tax in 1939.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005
Rhode Island Property Taxes: Among the Highest
Rhode Island is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Rhode Island's localities collected $1,772.61 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Rhode Island collected only $1.39 per capita during FY 2006, making its combined state/local property taxes $1,774.00 per capita, which ranks 7th highest nationally.
State property tax collections per capita by state
Federal Tax Burdens and Expenditures: Rhode Island Breaks Even:
Rhode Island taxpayers receive about as much federal funding per dollar of federal taxes paid compared to the average state. Per dollar of federal tax collected in 2005, Rhode Island citizens received approximately $1.00 in the way of federal spending. This ranks the state 33rd highest nationally and represents a decline from 1995 when Rhode Island received $1.14 per dollar of taxes in federal spending (19th highest). Neighboring states and the federal spending they received per dollar of federal taxes collected were: Connecticut ($0.69) and Massachusetts ($0.82).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state
