January 13, 2015

Rhode Island

State & Local Taxes in 2015


Rhode Island Tax Code Features

Progressive Features

• Graduated personal income tax structure

• Comparatively high standard deduction, personal exemption, and dependent exemption

• Standard deduction and personal exemption phase-out for upper-income taxpayers

• Provides a 10 percent refundable Earned Income Tax Credit (EITC)

• Sales tax base excludes groceries

• Requires the use of combined reporting for the corporate income tax

Regressive Features

• Fails to provide a property tax “circuit breaker” credit for low-income non-elderly taxpayers

• Comparatively high cigarette tax rate

Tax Changes Enacted in 2013 & 2014

• Partially refundable Earned Income Tax Credit converted to a fully refundable 10 percent credit

• Refundable low-income property tax credit was eliminated for homeowners and renters under age 65

• Three significant changes to the corporate income tax: adopted mandatory combined reporting, moved to single-sales factor apportionment, and lowered the rate to 7%

• Small gas tax increase

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Rhode Island has the 23rd most unfair state and local tax system in the country. States with regressive tax struc­tures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Appendix B for state-by-state rankings and more details).

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