-
Overall Rank
39
Up 1 place since 2026 -
37
Down 5 places since 2026 -
26
Up 4 places since 2026 -
30
No change since 2026 -
43
Down 1 place since 2026 -
Unemployment Insurance Tax Rank
48
No change since 2026
Rhode Island ranks 39th overall on the 2027 State Tax Competitiveness Index.
Score 4.62 / 10
Notable Changes Rhode Island is singled out in the study for forthcoming changes.
Forthcoming, Not Yet Reflected
In June 2026, H 7127 was adopted, creating a new three percentage-point surtax on individual income over $1 million. This policy change will phase in over three years, raising the state’s top marginal individual income tax rate from 5.99 in 2026 to 6.99 percent in 2027, 7.99 percent in 2028, and 8.99 percent in 2029. This change will hurt Rhode Island’s performance on future editions of the Index.
Snapshot date: The 2027 Index measures each state's tax law as of July 1, 2026. Changes enacted after that date are not reflected in these ranks.
About Rhode Island's Tax Code
Rhode Island ranks poorly overall due to below-average rankings on all five components. Hurting Rhode Island’s individual income tax component ranking is the sizeable marriage penalty in its individual income tax brackets, with bracket thresholds that are not adjusted for married couples. While it will only affect future Index rankings, Rhode Island also adopted a new top marginal rate of 8.99 percent, which is three percentage points higher than its current top rate of 5.99 percent, beginning to phase in in 2027. On the corporate component, Rhode Island taxes net CFC tested income (NCTI), making it more expensive for corporations to do business in the Ocean State. Furthermore, Rhode Island does not offer bonus depreciation even though it conforms to the federal limitation on business net interest deductibility. However, Rhode Island recently made strides to improve its treatment of business net operating losses (NOLs) by increasing the NOL carryforward period from 5 to 20 years, bringing it more in line with other states.
On the property tax component, Rhode Island benefits from forgoing a capital stock tax and provides a tangible personal property de minimis exemption, but the state continues to levy an estate tax, taxes commercial property more heavily than residential property, and collects relatively high property taxes per capita and as a share of owner-occupied housing value.
While Rhode Island’s state sales tax rate is among the highest in the country, its lack of local sales taxes places the combined state and average local sales tax rate near the middle of the pack. Notably, however, Rhode Island has one of the highest tobacco tax rates in the country. Furthermore, despite recent reforms, Rhode Island’s UI tax continues to rank among the least competitive in the country due to high minimum and maximum rates, a wage base that exceeds the federal wage base, a long experience rating qualifying period, and a surtax.
Component Scores
#39 overall · 4.62 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #37 | 4.80 / 10 | |
| Individual Income Taxes | #26 | 5.27 / 10 | |
| Sales Taxes | #30 | 4.52 / 10 | |
| Property Taxes | #43 | 3.92 / 10 | |
| Unemployment Insurance Taxes | #48 | 3.72 / 10 |
Ranking Changes, 2020–2027
#39 in 2027 · up 5 places from 2020Rhode Island ranked 44th in 2020 and ranks 39th in 2027, an improvement of 5 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 44 (4.54) | 35 (4.95) | 26 (5.20) | 32 (4.52) | 48 (3.38) | 47 (3.82) |
| 2021 | 43 (4.61) | 34 (4.97) | 24 (5.26) | 32 (4.53) | 47 (3.55) | 48 (3.91) |
| 2022 | 41 (4.65) | 33 (5.00) | 24 (5.30) | 29 (4.57) | 46 (3.58) | 47 (3.83) |
| 2023 | 41 (4.66) | 33 (4.97) | 26 (5.27) | 32 (4.54) | 45 (3.75) | 46 (3.90) |
| 2024 | 39 (4.72) | 33 (4.95) | 30 (5.18) | 29 (4.55) | 43 (4.10) | 45 (4.16) |
| 2025 | 40 (4.66) | 33 (4.93) | 31 (5.14) | 29 (4.55) | 44 (4.02) | 47 (3.93) |
| 2026 | 40 (4.65) | 32 (4.96) | 30 (5.15) | 30 (4.49) | 42 (4.13) | 48 (3.74) |
| 2027 | 39 (4.62) | 37 (4.80) | 26 (5.27) | 30 (4.52) | 43 (3.92) | 48 (3.72) |
Rhode Island Compared across the States
#39 overallEach row places the states on a 0 to 10 score scale for one measure. Rhode Island is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#39 4.62
Corporate Taxes
#37 4.80
Individual Income Taxes
#26 5.27
Sales Taxes
#30 4.52
Property Taxes
#43 3.92
Unemployment Insurance Taxes
#48 3.72
- Rhode Island
- Other states, by rank (1st to 50th)
- 50-state median
Rhode Island and Its Neighbors
#39 overallRhode Island borders 2 states and ranks 39th overall; it outranks every one of them.
-
Rhode Island #39 Score 4.62 This state -
Massachusetts #45 Score 4.34 6 places behind -
Connecticut #46 Score 4.28 7 places behind
What Each Component Includes
The five components of the Index, what each one covers, and where Rhode Island lands. Open any component for the full breakdown.
-
Corporate Taxes
Rank #37Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for Rhode Island → -
Individual Income Taxes
Rank #26Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for Rhode Island → -
Sales Taxes
Rank #30Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for Rhode Island → -
Property Taxes
Rank #43Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for Rhode Island → -
Unemployment Insurance Taxes
Rank #48Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for Rhode Island →
Tax Data Explorer
Every policy variable behind Rhode Island's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
151 data points · Shaded values differ from Rhode Island
Corporate Taxes: Corporate Income Tax Rates
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Bracket 1 | 7.0% > $0 | 7.5% > $0 (differs) | 8.0% > $0 (differs) |
| Bracket 2 | n.a. | 8.25% > $100,000,000 (differs) | n.a. |
| Gross Receipts Tax | No | No | No |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Job Credits | Yes | Yes | Yes |
| Research and Development Credits | Yes | Yes | Yes |
| Investment Credits | Yes | Yes | Yes |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Conforms to Federal NOL Treatment | No | No | No |
| Carryback (Years) | 0 | 0 | 0 |
| Carryback Cap | $0 | $0 | $0 |
| Carryforward (Years) | 20 | 30 (differs) | 20 |
| Carryforward Cap | 80% | 50% (differs) | Unlimited (differs) |
Corporate Taxes: Treatment of Capital Investment
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Section 168(k) Expensing | 0% | 0% | 0% |
| Conforms to Section 163(j) Limitation | Yes | No (differs) | Yes |
| GILTI Inclusion | 50% Inclusion | 5% Inclusion (differs) | 5% Inclusion (differs) |
| Section 174 Expensing | No | Yes (differs) | Yes (differs) |
| Section 168(n) Expensing | No | No | No |
Corporate Taxes: Other Corporate Base Variables
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Rolling | Rolling | Rolling |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Yes | Yes |
| Throwback Rule | Yes | No (differs) | Yes |
| Foreign Tax Deductibility | Yes | Yes | No (differs) |
| Corporate AMT | No | No | No |
| Brackets Indexed for Inflation | Flat CIT | No (differs) | Flat CIT |
Individual Income Taxes: Individual Income Tax Rates
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Bracket 1 | 3.75% > $0 | 2.0% > $0 (differs) | 5.0% > $0 (differs) |
| Bracket 2 | 4.75% > $82,050 | 4.5% > $10,000 (differs) | 9.0% > $1,107,750 (differs) |
| Bracket 3 | 5.99% > $186,450 | 5.5% > $50,000 (differs) | n.a. (differs) |
| Bracket 4 | n.a. | 6.0% > $100,000 (differs) | n.a. |
| Bracket 5 | n.a. | 6.5% > $200,000 (differs) | n.a. |
| Bracket 6 | n.a. | 6.9% > $250,000 (differs) | n.a. |
| Bracket 7 | n.a. | 6.99% > $500,000 (differs) | n.a. |
| Standard Deduction (Single Filer) | $11,200 | n.a. (differs) | n.a. (differs) |
| Personal Exemption (Single Filer) | $5,250 | $15,000 (differs) | $4,400 (differs) |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | $5,250 | n.a. (differs) | $1,000 (differs) |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | None | None | None |
| Surtaxes on Wage Income | n.a. | n.a. | 0.88% (differs) |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Marriage Penalty | Yes | No (differs) | No (differs) |
| Married Couples Can File Separately on One Return | No | No | No |
| Convenience Rule | No | Partial (differs) | No |
| Interest Taxed | Yes | Yes | Yes |
| Dividends Taxed | Yes | Yes | Yes |
| Capital Gains Taxed | Yes | Yes | Yes |
| Combined Capital Gains Tax Rate | 5.99% | 6.99% (differs) | 9% (differs) |
| Tax Brackets Indexed for Inflation | Yes | No (differs) | Yes |
| Standard Deduction Indexed for Inflation | Yes | Yes | Yes |
| Personal Exemption Indexed for Inflation | Yes | No (differs) | No (differs) |
| Progressivity Ratio | 1.60 | 1.55 (differs) | 1.80 (differs) |
Individual Income Taxes: Other Individual Base Variables
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Rolling | Rolling | Static (not current) (differs) |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes |
| AMT Levied | No | Yes (differs) | No |
| Recognition of S Corporation Status | Yes | Yes | Yes |
| Section 179 Expensing Limit | $2,560,000 | $512,000 (differs) | $1,250,000 (differs) |
| Tips | Taxable | Taxable | Taxable |
| Overtime | Taxable | Taxable | Taxable |
| Filing and Withholding Threshold Index | 0 | 5 (differs) | 0 |
Individual Income Taxes: Other Individual Income Variables
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Income Recapture | No | Yes (differs) | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| State Sales Tax Rate | 7.00% | 6.35% (differs) | 6.25% (differs) |
| Average Local Sales Tax Rate | 0.00% | 0.00% | 0.00% |
| Maximum Local Sales Tax Rate | None | None | None |
| Gasoline Tax (Cents per Gallon) | 41.12 | 25.00 (differs) | 27.56 (differs) |
| Diesel Tax (Cents per Gallon) | 41.12 | 49.9 (differs) | 27.56 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $4.50 | $4.35 (differs) | $3.51 (differs) |
| Beer Tax (Dollars per Gallon) | $0.1242 | $0.1935 (differs) | $0.1065 (differs) |
| Spirits Tax (Dollars per Gallon) | $5.40 | $5.94 (differs) | $4.05 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 50.00% | 40.00% (differs) | 196.25% (differs) |
Sales Taxes: Business-to-Business Exemptions
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | Some Taxable |
| Farm Equipment | Exempt | Exempt | Exempt |
| Office Equipment | Taxable | Taxable | Taxable |
| Manufacturing Machinery | Exempt | Exempt | Exempt |
| Manufacturing Raw Materials | Exempt | Exempt | Exempt |
| Business Fuel and Utilities | Exempt | Exempt | Exempt |
| Business Leases and Rentals | Taxable | Taxable | Taxable |
| Information Services | Exempt | Taxable (differs) | Exempt |
| Software as a Service (SaaS) | Taxable | Partial (differs) | Taxable |
| Platform as a Service (PaaS) | Taxable | Exempt (differs) | Taxable |
| Digital B2B Products | Exempt | Taxable (differs) | Exempt |
| Payroll Services | Exempt | Exempt | Exempt |
| Data Center Purchases | Taxable | Exempt (differs) | Exempt (differs) |
| Digital Advertising Tax | No | No | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Groceries | Exempt | Exempt | Exempt |
| Clothing | Exempt | Taxable (differs) | Exempt |
| Prescription Medication | Exempt | Exempt | Exempt |
| Nonprescription Medication | Taxable | Exempt (differs) | Taxable |
| Gasoline | Exempt | Exempt | Exempt |
| Landscaping | Exempt | Taxable (differs) | Exempt |
| Repair Services | Exempt | Taxable (differs) | Exempt |
| Real Estate Services | Exempt | Exempt | Exempt |
| Parking | Exempt | Taxable (differs) | Exempt |
| Dry Cleaning | Exempt | Taxable (differs) | Exempt |
| Fitness Services | Exempt | Taxable (differs) | Exempt |
| Barber Services | Exempt | Exempt | Exempt |
| Veterinary Services | Exempt | Exempt | Exempt |
| E-Books | Taxable | Taxable | Exempt (differs) |
| Streaming Video | Taxable | Taxable | Exempt (differs) |
| Medical Services | Exempt | Exempt | Exempt |
| Legal Services | Exempt | Exempt | Exempt |
| Financial Services | Exempt | Exempt | Exempt |
| Accounting Services | Exempt | Exempt | Exempt |
| Sales Tax Holiday | No | Yes (differs) | Yes (differs) |
Sales Taxes: Sales Tax Structure
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | Yes |
| Unified Tax Administration | Yes | Yes | Yes |
| Safe Harbor for Remote Sellers | Sales or Transactions Threshold | Gross Sales Threshold (differs) | Gross Sales Threshold (differs) |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Property Tax Collections per Capita | $2,530 | $3,422 (differs) | $3,215 (differs) |
| Property Tax as a Percentage of Personal Income | 3.58% | 3.60% (differs) | 3.44% (differs) |
| Assessment Limit | No | Yes (differs) | No |
| Levy Limit | Yes | No (differs) | Yes |
| Capital Stock Tax Rate | None | 0.16% (differs) | 0.26% (differs) |
| Capital Stock Tax Maximum Payment | n.a. | $1,000,000 (differs) | Unlimited (differs) |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. | Pay highest (differs) | Pay both (differs) |
Property Taxes: Property Tax Bases
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Tangible Personal Property Tax | Yes | Yes | Yes |
| Tangible Personal Property De Minimis Exemption | $50,000 | None (differs) | None (differs) |
| Intangible Property Tax | No | No | No |
| Inventory Tax | No | No | Partial (differs) |
| Real Estate Transfer Tax | Yes | Yes | Yes |
| Split Roll | Yes | Yes | Yes |
| Split Roll Ratio | 3.48 | 1.90 (differs) | 2.17 (differs) |
| Estate Tax | 16% | 12% (differs) | 16% |
| Inheritance Tax | No | No | No |
| Gift Tax | No | Yes (differs) | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Minimum Rate | 1.10% | 1.10% | 1.17% (differs) |
| Maximum Rate | 9.70% | 9.90% (differs) | 17.14% (differs) |
| Taxable Wage Base | $30,800 | $27,000 (differs) | $15,000 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.21% | 0.50% (differs) | 0.56% (differs) |
| Most Favorable Schedule: Maximum Rate | 7.40% | 5.40% (differs) | 8.62% (differs) |
| Least Favorable Schedule: Minimum Rate | 1.20% | 0.50% (differs) | 1.21% (differs) |
| Least Favorable Schedule: Maximum Rate | 10.00% | 5.40% (differs) | 18.55% (differs) |
| Employer Contributions as a Share of Total Wages | 0.97% | 0.53% (differs) | 0.43% (differs) |
| Employer Contributions as a Share of Taxable Wages | 2.22% | 1.91% (differs) | 2.06% (differs) |
| Trust Fund Solvency Ratio | 0.9 | 0.08 (differs) | 0.25 (differs) |
| New Employer Rate | 1.21% | 1.90% (differs) | 2.13% (differs) |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Experience Formula Based On | Reserve Ratio | Benefits Ratio (differs) | Reserve Ratio |
| Benefits Charged in Proportion to Base-Period Wages | No (most recent or principal employer) | Yes (differs) | No (base-period employers in inverse chronological order) (differs) |
| Charged If Employee's Benefit Award Is Reversed | No | No | No |
| Charged for Reimbursements on Combined Wage Claims | No | No | Yes (differs) |
| Charged If Employee Left Voluntarily | No | No | Yes (differs) |
| Charged If Employee Was Discharged for Misconduct | No | No | Yes (differs) |
| Charged If Employee Refused Suitable Work | No | No | Yes (differs) |
| Charged If Employee Continues to Work Part-Time | No | No | No |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | Rhode Island | Connecticut | Massachusetts |
|---|---|---|---|
| Solvency Tax | No | Yes (differs) | Yes (differs) |
| Taxes for Socialized Costs or Negative Balance Employers | No | No | No |
| Loan and Interest Repayment Surtaxes | No | Yes (differs) | No |
| Reserve Taxes | No | No | No |
| Surtaxes for UI Administration or Non-UI Purposes | Yes | No (differs) | Yes |
| Temporary Disability Insurance | Yes | No (differs) | No (differs) |
| Voluntary Contributions | Yes | No (differs) | Yes |
| Years to Qualify for Experience Rating | 3 | 1 (differs) | 3 |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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