Taxation in Rhode Island

Updated on Monday 07th January 2019

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Companies in Rhode Island are not subject to the franchise tax which was eliminated in 2015. However, investors in Rhode Island should consider the business corporation tax which is at a flat rate of 7%. Our company formation specialists in USA are at the disposal of foreign and local business persons who are interested in establishing their activities through different types of entities for which specific taxes are imposed.

What is the business corporation tax rate in Rhode Island?

7% flat rate represents the business corporation tax in 2018 for C corporations established in Rhode Island. As for S corporations, these are subject to a minimum corporate tax of $400. As an example in this sense, if an S corporation had a net income of $200,000 in 2018, the business corporate tax is $400. However, these kinds of companies are considered pass-through entities, just like the limited liability companies, where the business income tax is paid by each shareholder on his/her share of the company’s profits.

How is the personal income tax levied in Rhode Island?

The personal incomes in Rhode Island are levied with a tax ranging from 3.75% to 5.99%. Please note that our team of consultants is at your disposal with broad information about the taxes you need to pay for your company in Rhode Island. The same team can help investors start a business in USA in any chosen state for business. The table below explains the personal tax rates in Rhode Island:                        
 Taxable Income   Tax Rate
 For the first $60,550  3.75%
 Between $60,551 and $137,650     4.75%
 For more than $137,651  5.99%

Taxes for partnerships in Rhode Island

The profits of general partnerships in Rhode Island are distributed to each partner who must pay the taxes imposed on the calculated amount of profit. The tax rate will vary depending on a partner’s overall taxable income registered in a year.

What is the sales tax rate in Rhode Island?

The general sales tax in Rhode Island is set at 7% rate for goods and services for sale purposes in this state. Please bear in mind that the use tax is collected in Rhode Island if personal properties are acquired outside the state, but destined for consumption in Rhode Island.

The property tax in Rhode Island

1.65% represents the property tax rate imposed on the price of the acquired property in Rhode Island. Even though it is the highest tax rate imposed on properties in this state, foreign investors are extremely attracted to the real estate market whether for personal matters or for business purposes. Feel free to ask us any questions about the taxes you must pay if you have a company in USA, including Rhode Island. You can also solicit information about how you can open a business in USA.

Tax deductions for citizens in Rhode Island

It is good to know that recorded deductions are not accepted in Rhode Island, however, the typical deduction in this state is set at $8,300 for single filers and married persons filing separately. No more than $16,600 is applicable for joint filers and qualifying widowers. As for heads of households in Rhode Island, they can deduct $12,450. Taxpayers in Rhode Island are entitled to claim credits for child and dependent care overheads which are equal to 25% of the particular federal credits.

Other tax facts for Rhode Island

Entrepreneurs who decide on opening more than just one company in USA should consider that they will be subject to nexus. This means that, besides the taxes paid for having a company in Rhode Island, entrepreneurs will have to pay the taxes in other states too, if they have registered companies there. Even if your company is registered with a business office in a specific state, but generates profits in Rhode Island, you should consider the tax obligations in this state. Alcohol tax, cigarette tax and gas tax are also important to consider at the time you decide for doing business in Rhode Island.

We remind that you can read the general guide to company incorporation in Rhode Island and find out a series of details about how you can set up a company in this state, with comprehensive assistance and guidance provided by our team of consultants. It is also extremely important to solicit information about the taxes imposed for all kind of companies with establishments in Rhode Island.

Please do not hesitate to get in touch with our team of company incorporation representatives in USA and ask for complete information about the taxation structure in Rhode Island, if you decide for opening a company in this state.