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Rhode Island’s sales tax rate and use tax rate is 7 percent on retail sales of tangible personal property and some services. Rhode Island also has additional taxes for certain industries, such as a hotel tax, telecommunications tax, corporate tax, and meals and beverage tax.
Types of taxes
Rhode Island has several taxes in addition to sales and use tax.
Sales and use tax
In addition to Rhode Island’s sales tax of 7 percent, the state has a use tax that works in conjunction with the sales tax. If a business purchases taxable tangible personal property without paying taxes and does not resell the products, it must pay the use tax.
Additionally, individuals who purchase taxable items and do not pay tax must also pay the use tax.
Alcoholic beverage taxes
Rhode Island has an excise tax on alcohol paid by filers who are wholesalers, distributors, and manufacturers. The taxes are per gallon. The taxes are as follows:
- Still wines: $1.40.
- Still wines with Rhode Island fruit: $0.30.
- Sparkling wines: $0.30.
- Whiskey and other distilled spirits: $5.40.
- Low-proof distilled spirits: $1.10.
- Ethyl alcohol for beverage purposes: $7.50.
- Ethyl alcohol for non-beverage use: $0.08.
- Malt beverage, including beer: $3.30. (This tax is per 31-gallon barrel instead of per gallon).
Automobile rental surcharge tax
Car rental companies must collect and remit a motor vehicle rental surcharge of 8 percent of gross receipts per veicle. The tax is only due on rentals that are 30 or fewer consecutive days. The surcharge is subject to sales tax.
Thus, a business owner must figure the motor vehicle rental surcharge tax, then figure sales tax. For example, if a rental costs $100, the vehicle surcharge is $8. Then, figure the sales tax on $108. The sales tax is $7.56. The total owed by the consumer is $115.56.
Rhode Island business tax
Rhode Island charges businesses a corporate tax of $400 or 7 percent on the business income, whichever the business owner chooses. This tax liability is due annually.
Motor fuel taxes
Distributors of motor fuels must pay a motor fuel tax in Rhode Island. The gasoline tax is based on the Consumer Price Index for all Urban Consumers. The CPI-U is published every September 30. The state rounds all adjustments to the nearest one-cent increment.
Taxes for 2022 are:
- Fuel oil: $0.125.
- Motor fuel: $3.794.
- Gasoline (all types): $3.72.
- Utility (piped) gas service: $0.875.
Rhode Island has a cigarette tax of 212.5 mills per cigarette and per sheet of cigarette rolling paper sold in the state, which is a tax of $4.25 per pack of 20 cigarettes. Distributors pay the tax and pass it onto the consumer. Distributors can purchase indicia stamps at a discount, which compensates them for placing the stamp on the packages.
Rhode Island imposes an excise tax on all other tobacco products, including:
- Pipe tobacco.
- Smokeless tobacco.
- Smoking tobacco.
- Chewing tobacco of any kind.
- Any other items made of tobacco or tobacco substitute, except cigarettes.
The tax is 80 percent of the wholesale cost; however, the tax cannot exceed $0.50 for each cigar. Licensed distributors collect the tobacco excise tax and sales tax. They must file a tax return and remit payment on or before the 10th day of each month.
Businesses that have hard-to-dispose of materials must collect and remit taxes for certain items on or before the 25th day of each month. Any retailer selling the following items must collect and remit the tax. Materials with the hard-to-dispose tax include:
- Lubricating oils: Quart – $0.10, Liter – $0.106.
- Antifreeze: Gallon – $0.20, Liter – $0.0528.
- Organic solvents: Gallon – $0.005, Liter – $0.00132.
- Tires: $1.00 per tire.
The taxes must show up as separate line items on the consumer’s receipt. If a wholesaler collects the tax, it uses Form HTDT-3 to pay the tax. If a retailer collects the tax, it uses Form HTDT-4 to pay the tax. Both taxes are paid to the Rhode Island Division of Taxation.
New motor vehicle dealers and other retailers must charge a fee of $6.00 per vehicle. For new motor vehicles, the levied fee is collected and paid to the Rhode Island Division of Motor Vehicles when the dealer titles the vehicle.
Rhode Island has a hotel tax of 6 percent. It also levies a 1-percent tax on whole house rentals. Anyone required to pay the hotel tax must apply for a sales tax permit. The hotel tax is in addition to the state sales tax of 7 percent. Those in Newport remit the tax directly to the city. Everyone else can remit the tax through their online accounts.
Real estate conveyance tax
At the sale of any real estate property, Rhode Island levies a tax of $2.30 for each $500 or fraction thereof, including liens and encumbrances that remain at the time of the sale.
Mobile homes and manufactured homes are taxed at $1.40 per $500 or fraction thereof, including liens and encumbrances at the time of the sale. Modular homes outside of a manufactured or mobile home park are exempt.
Additionally, homes sales greater than $800,000, including liens and encumbrances, have an additional $2.30 levied for each $500 or fraction thereof of consideration paid.
This tax is paid when the deed is recorded with the city or town where the property is located. Usually, the closing attorney pays the tax from money the firm holds in escrow. The town or city files a real estate tax return with the Rhode Island Division of Taxation.
Rhode Island does not have a local sales tax or use tax at the local level, but cities, towns, and counties may have discretionary taxes, including a food and beverage tax. The state levies a local meals and beverage tax on prepared meals and beverages sold in an eating establishment.
The tax is 1 percent of the gross receipts. The business collects and remits the tax to the Rhode Island Division of Taxation.
Registering for and filing Rhode Island’s taxes for sales of goods
Business taxpayers can register for a tax account in person, by mail, or online. The tax account gives you the permit for retail sales, and income tax withholding account, and the Rhode Island Unemployment insurance account.
If you register in person, visit the Rhode Island Division of Taxation, One Capitol Hill, Providence, RI 02908. The application fee is $10. The fee is renewable every year.
A business can also create an account online. The online account allows you to pay sales and use tax, the litter fee, and the cigarette license.
Rhode Island sales tax due dates
Sales tax returns (and use tax returns) are due on or before the 20th day of each month.
Rhode Island sales tax holiday
Rhode Island does not have a sales tax holiday.
Remote and marketplace sellers
Remote sellers and marketplace facilitators must collect Rhode Island’s sales tax if the seller had gross revenues of $100,000 or more for the previous year or 200 or more individual transactions. Remote sellers can register with the Rhode Island Division of Taxation to remit tax returns and make payments.
Businesses can also use the Streamlined Sales and Use Tax Governing Board website to register for a sales tax account.
Rhode Island levies a sales and use tax rate of 7 percent.
Certain nonprofits may be eligible for a sales tax exemption certificate. A business needs a separate resale certificate to purchase taxable tangible personal property for resale without paying taxes. The resale certificate does not get filed with the Rhode Island Divisioni of Taxation. Instead, give a copy to the seller and keep a copy at the business.
No. Only businesses with a portion or all retail sales must register for an account, and collect and pay taxes.
Yes. Businesses must renew the sales tax permits every year.
You must register for a sales tax account and permit before you open your business. A business must pay taxes on every sale, including the first sales.
Yes. Every business must file a return regardless of whether it had sales.
No. However, depending on your physical or financial nexus (you have a store in the other state or had over $100,000 is gross receipts to that state or 200 or more separate transactions in the other state), you might need to collect and pay the other state’s sales tax.