Rhode Island Sales Tax 2023 - 2024

Rhode Island sales tax is a state-level consumption tax on tangible personal property and some services. Rhode Island Sales Tax rate is 7%, and there are no local sales taxes. The state also has a use tax that works in conjunction with the sales tax. Businesses that purchase taxable products and do not pay the sales tax must file a use tax return and pay the appropriate amount of tax.

Sales tax is complicated, and the rules vary from state to state. The question of whether you need to collect sales tax depends on having a significant link with the state, called nexus. This can be physical nexus, such as having an office or retail store in the state, or economic nexus, such as reaching a threshold for total revenue or number of transactions.

Rhode Island also has a 6% hotel tax on the rental of rooms in hotels, motels, and lodging houses.

A use tax in Rhode Island applies to purchases made out of state that are used or stored in Rhode Island. The use tax rate is also 7%.

Items Exempt from Rhode Island Sales Tax

There are a few items that are exempt from Rhode Island sales tax, including:

• Groceries
• Prescription drugs and medical devices
• Farm equipment
• Gasoline
• Natural gas and electricity
• Most services (such as haircuts, legal services, and dry cleaning)

You can find a complete list of sales tax exemptions on the Rhode Island Division of Taxation website.

Rhode Island Sales Tax Registration

If you have nexus in Rhode Island, you must register for sales tax and collect it on all your sales. You must also file sales tax returns monthly or quarterly, depending on your total average monthly sales tax liability. Filing fees are $10 per return, and renewals are due annually.

Sales Tax Audits

If you receive a sales tax audit report, having a sales tax expert present during the meeting with the auditor is a good idea. This will help you to challenge any areas where the auditor has misinterpreted or incorrectly applied Rhode Island’s sales tax laws. If you don’t challenge the audit assessment, you could wind up overpaying the state by thousands of dollars

Rhode Island Sales Tax Extension

You can file an extension (Form RI-4868) request online through the Rhode Island Division of Taxation’s Tax Portal. To do this, you will need to create an account or log in to your existing account. Once you are logged in, you can select the “File Extension” option and follow the instructions.

You can mail a written request for an extension to the Rhode Island Division of Taxation. Your request should include:

• Your name.
• Business name (if applicable).
• Tax ID number.
• The tax period for which you are requesting an extension.
• The reason for your request.

You can mail your request to:

Rhode Island Division of Taxation

One Capitol Hill

Providence, RI 02908