Personal income tax
In 2011, Rhode Island's tax system underwent the most sweeping changes since the state tax was enacted in 1971. Most notable was the reduction of the top tax rate from 9.9 percent to 5.99 percent.
The state now collects taxes from its residents at the following rates (2013 tax year inflation adjustments):
-- 3.75 percent on the first $58,600 of taxable income.
-- 4.75 percent on taxable income between $58,601 and $133,250.
-- 5.99 percent on taxable income of $133,251 and above.
The Ocean State's tax returns are due April 15, or the next business day if that date falls on a weekend or holiday.
Rhode Island's sales tax rate is 7 percent.
Rhode Island joined a national coalition of states in conforming the Rhode Island Sales and Law to the provisions of the Streamlined Sales and Use Tax Agreement, or SSUTA. The SSUTA was developed over the course of several years through the joint effort of over 40 states participating in the Streamlined Sales and Use Tax Project. The underlying purpose of the Agreement is to simplify and modernize the administration of the sales and use tax laws of the member states in order to facilitate multistate tax administration and compliance. The provisions of the new law took effect Jan. 1, 2007.
Rhode Island also collects a corresponding use tax at the same rate. When you make a purchase of tangible personal property outside of Rhode Island's taxing jurisdiction and the purchase is destined for storage, use or consumption in Rhode Island, it is subject to the use tax and you need to file Form T-205.
Personal and real property taxes
The administration of the assessment and collection of all real and tangible personal property taxes in the state of Rhode Island is handled by the municipal assessor and collector in the jurisdiction where the property is located. Local tax rates can be found at the Rhode Island Department of Revenue website.
The local tax is the only tax on property in Rhode Island, with the exception of fire district taxes in several rural communities.
Real property and real property improvements are required to be reported on the personal property statement by the taxpayer. The taxpayer is required to file a personal property statement reporting all tangible personal property in the taxing jurisdiction as of midnight Dec. 31 each year prior to the filing year.
The property tax relief credit is available to residents whose total household income does not exceed $30,000. The refund is calculated based on the amount by which property taxes (or rent) exceed a percentage of the household income. The maximum refund is $300. Applicants must file Form RI-1040H.
Inheritance and estate taxes
There is no inheritance tax in Rhode Island, but the state does impose a tax on the transfer of the net value of the assets of every resident decedent and the value of real and personal property of nonresident decedents located within the state.
The Rhode Island estate tax was designed to absorb the federal estate tax credit for state death taxes. With the phaseout of the federal credit for state estate taxes, Rhode Island has decoupled from current federal estate tax laws and imposes an estate tax based on the version of the Internal Revenue Code in effect Jan. 1, 2001.
Form 100 must be filed for estates of decedents who died on or after Jan. 1, 2013, with a gross estate of $910,725 or less. For 2014, the exclusion amount is $910,725 or less.
Other Rhode Island tax facts
Rhode Island allows its taxpayers to contribute to various organizations through tax return checkoffs. Donation possibilities include a drug program account, the Olympics, the state organ transplant fund, the state council on the arts, a nongame wildlife fund, a childhood disease victims fund and a military family relief fund.
Ocean State taxpayers can go online to track their refunds.
The Rhode Island Division of Taxation maintains a list of the 100 delinquent taxpayers who owe the largest amount of state tax and whose taxes have been unpaid for more than 90 days.