At just over 3,000 km², Rhode Island is the smallest of all US states. The Ocean State is part of New England and sits on the East Coast along the Atlantic Ocean. It has only two neighbors: Massachusetts to the north and east and Connecticut to the west. The capital, Providence, is also the largest city, with almost 180,000 residents. In total, a little over one million people live in the state.
Rhode Island's economy is growing. Average productivity has reversed its decline, and advanced sectors are expanding, with positive effects for businesses across the state. The budding comeback is easy to see: a new Innovation & Design District, a new co-working space in Newport, Electric Boat's submarine production facility at Quonset Industrial Park and the offshore wind farm off Block Island.
The state has proven it can design and fund a range of meaningful projects and support both businesses and workers. The Ocean State is full of opportunities for businesses on the rise.
Small state, big reach
Rhode Island's location on the I-95 Northeast Corridor means easy access to the major metro areas. This ideal position offers all the advantages of big economic hubs, including easy access to top companies, every kind of transportation and world-class universities. Boston is less than 45 minutes away, and New York City less than three hours.
A third of all Fortune 100 companies are headquartered in the Northeast, and the region accounts for a good 20 percent of all US jobs. Nearby airports and shipping terminals offer easy access to Europe and other international markets. On top of that, Rhode Island has the best broadband service in the entire United States, so it is well equipped for the demands of the modern economy.
Key industries: life sciences
Rhode Island is strong in biomedical innovation, which advances scientific knowledge of biological processes and systems in ways that are reshaping how diseases are diagnosed and treated. There are especially attractive market opportunities in neuroscience therapeutics, medical devices for orthopedic, biosensing and neurological applications, and health informatics and digital innovation.
Biomedical innovation is converging with technology development in other scientific fields, including electronics, information technology, imaging and nanoscience, producing new insights that feed into the development of biomedical products. The concentration of the health and life sciences industry in Rhode Island is 31 percent higher than the national average.
Key industry: IT and software
The convergence of technologies such as wireless communications, sensors, imaging data and cyber-physical systems is creating strong and constantly evolving consumer demand. Thanks to the state's strengths in engineering, design, data analytics, cybersecurity and computer science, Rhode Island companies are in a leading position. Its collaborative environment means technological innovation is put to work across industries. Specific growth opportunities include cyber-physical systems and data analytics, autonomous underwater vehicles, remote monitoring systems for medical devices, environmental and energy monitoring, and smart grid infrastructure.
Key industry: shipbuilding and maritime
The state is home to a wide range of maritime industries, including boatbuilding and boat services. A highly integrated maritime economy strengthens the Ocean State's competitive edge. Rhode Island's industry concentration in marine, materials and machinery is 86 percent higher than the national average.
General Dynamics Electric Boat builds the next generation of submarines for the U.S. Navy in Rhode Island. The best-known research area of the University of Rhode Island (URI) is its world-class ocean science and engineering program. Many of the world's top talents have studied at or worked with URI. The Naval Undersea Warfare Center leads the field in undersea systems and tests unmanned vehicles in Rhode Island's Narragansett Bay.
Income tax in Rhode Island
Rhode Island levies an income tax of 3.75 to 5.99%, depending on income. Starting with tax year 2027, a surcharge applies to taxable income over $1 million: 1% at first, 2% from 2028 and 3% from 2029. On top of that, federal income taxes are due.
Corporate tax in Rhode Island
Rhode Island levies a corporate tax of 7% (minimum tax $400). On top of that, federal corporate tax is due.
Sales tax in Rhode Island
The US has no European-style VAT. Instead, states, counties and municipalities levy a local sales tax on sales of goods (but not services).
Sales tax rate in Rhode Island
Sales tax in Rhode Island is 7% at the state level. Cities and counties do not levy sales tax.
Rhode Island nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date
Included transactions:
Gross revenue from sales of tangible personal property, prewritten computer software delivered electronically or by load and leave, vendor-hosted prewritten computer software, specified digital products and/or taxable services delivered into the state
Treatment of exempt sales:
Exempt sales are included, but exempt services are not included in the threshold.
Trigger:
Sales or transactions
Sales/transaction threshold:
$100,000 or 200 transactions
Evaluation period:
The threshold applies to the previous calendar year
Additional information:
- Registration requirements: Rhode Island requires a remote seller to register by January 1 of the year following the calendar year in which it exceeded the economic nexus threshold, and to collect and remit sales tax from then on. Different requirements apply if the threshold was exceeded in 2018. For more information, see ADV_2019_11.
- Remote seller information
- SB 251A and HB5278A
Rhode Island marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
August 17, 2017; new requirements from July 1, 2019
Economic nexus threshold:
Gross revenue of at least $100,000 or at least 200 transactions in the immediately preceding calendar year. Remote sellers should include sales made through both non-collecting and collecting marketplaces when calculating the threshold. Marketplace facilitators include all taxable sales made through the marketplace when calculating the threshold.
Note:
Marketplace facilitators and remote sellers that met Rhode Island's economic nexus threshold could choose, until June 30, 2019, to comply with notice and reporting requirements for non-collecting sellers instead of collecting sales tax. Effective July 1, 2019, this reporting option was abolished.
Registration requirements:
- Remote multichannel sellers: Once you exceed the economic nexus threshold, you must register with the Rhode Island Division of Taxation and collect Rhode Island sales tax on sales not taxed by a marketplace facilitator.
- You can exclude sales taxed by a marketplace facilitator from your tax returns.
- Remote marketplace sellers: You must register once you exceed the economic nexus threshold. Contact the Rhode Island Division of Taxation for more information.
- You can exclude sales taxed by a marketplace facilitator from your tax returns.
- In-state multichannel sellers: You must register with the Rhode Island Division of Taxation and collect tax on sales not taxed by a marketplace facilitator.
- You can exclude sales taxed by a marketplace facilitator from your tax returns.
- In-state marketplace sellers: You must register. Contact the Rhode Island Division of Taxation for more information.
- Learn more here.
For an overview of all states, see our guide to the US states. Whether Rhode Island or another state is the right home for your US company is covered in Which US state is best for your company?, and you will find the basics in our guide to forming a company in the USA.
How we help with Rhode Island:
Whether your Rhode Island business needs its own US company, and which state it should be based in, is something we work out together in a consultation. Entity types, options and fees are under US company formation.