State Income Tax
: 3.75% to 5.99% State Sales Tax
: 7% Estate Tax/Inheritance Tax
Retirement is far from a day at the beach in the Ocean State. Rhode Island not only taxes Social Security benefits, but it takes its share of virtually all other sources of retirement income, too. Now that the state has lowered its top tax rate from 9.9% to 5.99%, it extends that rate to investment income as well, so there's no preferential tax treatment for capital gains and dividends. The Tax Foundation says Rhode Island's median real estate taxes are the fifth-highest in the U.S., but low-income seniors are eligible for modest property-tax relief. Food, some clothing and prescription and nonprescription drugs are exempt from the 7% state sales tax.
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