Rhode Island

In 2003, Rhode Island's state income tax was set equal to 25% (down from 26% in 2001) of the taxpayer's federal income tax liability as it stood prior to the enactment of the federal Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. The basic corporate tax rate is 9%. The state sales and use tax is 7% with local add-ons prohibited. The state imposes a full array of excise taxes covering motor fuels, tobacco products, insurance premiums, public utilities, alcoholic beverages, pari-mutuels and other specified items. Before New York and Wisconsin raised their gasoline tax in 2002, Rhode Island had the highest in the country, at 28 cents a gallon. In 2002, Rhode Island raised its cigarette tax from 71 cents a pack to $1.32. Rhode Island's estate tax is independent of the federal estate tax exemption for state death taxes, and thus is not scheduled to expire with this exemption in 2007. Death and gift taxes accounted for 0.9% of state collections in 2002. Other state taxes include various license fees, stamp taxes, and state property taxes. Most property taxes, which are among the highest in the country, are collected at the local level. About 35% of Rhode Island's total state and local taxes are collected by local governments.

The state collected $$2,128 billion in taxes in 2002 (down $119 million from 2001), of which 38.7% came from individual income taxes, 34.4% came from the general sales tax, 20% from selective sales taxes, 4.4% from license fees, and 1.3% from corporate income taxes. In 2003, Rhode Island ranked 4th among the states in terms of combined state and local tax burden, which amounted to about 11% of income.

The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.