If you have plans to start a new business in Rhode Island (or if you own one already), it’s important to understand your tax obligations so you can manage your finances accordingly. After all, cash flow problems remain one of the biggest reasons startups fail today.
That’s why we’ve created this detailed guide on the taxes small businesses can expect to pay in the Ocean State.
What business taxes do you pay in Rhode Island?
Generally, the state taxes a small business pays depend on factors like its structure, employer status, and business activities.
Businesses in Rhode Island don’t pay franchise taxes. Instead, they’re typically responsible for income taxes, sales and use tax, employer taxes, and any industry-specific or local taxes that might apply to them. Here, we’ll look at each of these taxes in greater detail.
Rhode Island personal income tax
Pass-through entities like sole proprietorships, partnerships, and limited liability companies (LLCs) usually don’t pay income taxes themselves. Instead, their income tax obligations pass on to their business owners, who pay them through their personal returns at the state’s standard rates.
Rhode Island’s state income tax rate ranges from 3.75% to 5.99% in 2023.
How to file and pay
Personal tax returns (Form RI-1040 for residents and Form RI-1040NR for nonresidents or part-year residents) are due to the state’s Division of Taxation by April 15.
File your taxes electronically using the IRS Modernized eFile (MeF) program or by mail. If you prefer to file paper returns, send your completed tax form (along with your payment and payment voucher Form RI-1040V, if applicable) to the appropriate address listed on the personal tax form instructions guide.
Taxpayers who expect to owe over $250 in income taxes must make quarterly estimated tax payments using Form RI-1040ES. Mail your tax payments to the address below by April 15, June 15, September 15, and January 15:
Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908
Alternatively, you can make tax payments through Rhode Island’s Taxpayer Portal, the online system for filing and paying most of the state’s taxes.
You can find more information on the Rhode Island individual income tax on the Division of Taxation website.
Rhode Island partnership income tax return
Although the business owners are generally responsible for a pass-through entity’s income tax obligations, in Rhode Island, certain entities (including partnerships, S corporations, and LLCs) are required to file a separate information return with the Division of Taxation.
They may also be required to withhold income taxes from distributions made to nonresident owners, partners, members, or shareholders.
How to file and pay
Most pass-through entities will file Form RI-1065 by the 15th day of the third month following the end of the fiscal year. For companies following the calendar year, the due date is March 15. Single-member LLC filers submit their returns by the 15th day of the fourth month after the fiscal year ends instead.
Mail your returns, along with any payment due, to the address below:
Rhode Island Division of Taxation
One Capitol Hill, Suite 9
Providence, RI 02908-5811
Get more information about the tax filing guidelines for these business entities on the Division of Taxation website.
Rhode Island pass-through entity income tax
Instead of having the owners shoulder the income tax liability of their businesses, pass-through entities in Rhode Island can choose to be taxed on the entity level. This is done by taking what’s called the pass-through entity (PTE) tax election.
Businesses that make this election pay a 5.99% business income tax. The amount can then be used as a tax credit on the PTE owner’s personal tax return.
How to file and pay
Qualifying businesses that take the PTE election file income taxes by March 15 using Form R-PTE. Send the completed tax form to the address below:
Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908
Estimated tax payments must be sent each quarter by April 15, June 15, September 15, and December 15. These payments can be made online via the Taxpayer Portal or sent by mail, along with Form BUS-EST, to the address above. Any remaining tax balance should be sent along with your PTE tax return.
Visit the Division of Taxation website for more information on the tax filing guidelines for pass-through entities.
Rhode Island corporate income tax
C corporations, S corporations, and LLCs that elect to be taxed as either type of corporation pay Rhode Island income taxes if they do business in the state.
Corporations pay a 7% tax on all Rhode Island taxable income, with a minimum tax of $400. Although S corporations, limited liability partnerships, limited partnerships, and LLCs are generally considered pass-through entities, they’re required to pay the $400 minimum tax as well.
How to file and pay
Rhode Island corporate tax returns (Form RI-1120C for C corporations and Form RI-1120S for S corporations) are due on the same day that their federal counterparts are due.
This means that state returns for C corporations should be submitted by the 15th day of the fourth month following the end of the fiscal year or April 15 for calendar filers. S corporation tax returns are due by the 15th day of the third month after the fiscal year ends (March 15 if you follow the calendar year).
Corporations can file their tax returns by mail or electronically using the IRS MeF method. If you plan on filing your returns by mail, send them along with any payment to this address:
Rhode Island Division of Taxation
One Capitol Hill, Suite 9
Providence, RI 02908-5811
If your business expects to owe over $400 in corporate income taxes, you must pay quarterly estimated taxes by the 15th day of the fourth, sixth, ninth, and 12th months of the tax year. Send your tax payments and a completed Form BUS-EST by mail to the following address:
Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908
Alternatively, corporations can pay income taxes, including estimated tax payments, online via the Rhode Island Taxpayer Portal.
Learn more about the Rhode Island corporate tax by visiting the Division of Taxation website.
Sales and use tax
Businesses that sell physical products and certain taxable services may need to collect state sales tax at the point of purchase and pay it to the Rhode Island Division of Taxation. If your business purchases goods outside of Rhode Island for use within the state, you may be required to pay use tax as well.
The sales and use tax rate in Rhode Island is 7%. Hotels, motels, and lodging houses are assessed a 6% tax for lodging.
Because these taxes don’t apply to all transactions, check with the Division of Taxation or your tax professional to determine whether your business is required to collect sales tax.
How to file and pay
If you’re required to collect Rhode Island sales tax, you’ll need to register for a sales tax permit before starting your business. This can be done through the Department of Revenue’s Online Business Registration Service or the Taxpayer Portal. You’ll also use the Taxpayer Portal to file and pay your taxes.
Once registration is complete, you’ll file sales and use tax returns (Form RI-STR) monthly by the 20th day following the reporting period. Any taxes should also be paid at this time. Registered businesses must file a return each tax period, even if they didn’t make any sales during that month.
If your business reports a monthly tax liability of less than $200 for six consecutive months, you can apply to file and pay sales tax on a quarterly basis instead. If your application is approved, you’ll receive a written notice and file taxes on the last day of July, October, January, and April.
Note that the state’s sales tax permit expires every June 30th and must be renewed by February 1 each year.
Find out more details about the state sales and use tax by visiting the Division of Taxation’s website.
Withholding tax
If your business has employees who perform work in Rhode Island, you may be required to withhold taxes from the wages of these employees and pay it to the Division of Taxation. These taxes are known as withholding taxes or employer taxes.
Withholding tax rates often differ between employees because the tax rates are determined by factors like the employee’s income and withholding allowances.
In 2023, the Rhode Island withholding tax rate ranges from 3.75% to 5.99%, plus an additional fee. Use the employer’s income tax withholding tables to calculate how much to withhold from each employee’s paycheck.
How to file and pay
First, you’ll need to register for an income tax withholding account via the Rhode Island Online Registration Service. Then, you’ll be assigned a quarterly, monthly, or weekly filing frequency depending on your monthly withholding tax liability.
Review the chart below to get an idea of your filing frequency, along with due dates and tax forms to use for each.
| Filing frequency | Monthly withholding tax threshold | Due dates | Tax form |
| Quarterly | Less than $50 | Last day of the month following the end of the quarter | Form RI-941 |
| Monthly | More than $50 but less than $600 | The 20th of the month following the tax period | Form WTM |
| Weekly | $600 or more | The first business day following the end of the week | Not applicable, electronic filing required |
Note that although quarterly filers use Form RI-941 to report and pay their withholding taxes, all other filers must file this form to reconcile their tax payments with the state of Rhode Island.
Most employers can send their returns by mail to the address below:
Rhode Island Division of Taxation
One Capitol Hill
Providence, RI 02908
There are some exceptions, however. In addition to weekly filers, who are required to file and pay their taxes electronically, employers with an average withholding tax liability of $200 or more per month during the previous calendar year must file electronically as well.
All employers should also file Form RI W-3 (along with all state copies of their employee information returns) with the Division of Taxation by January 31.
Get more information on the Rhode Island income withholding tax on the Division of Taxation website.
Rhode Island employer tax
In most other states, employers are responsible for paying state unemployment insurance taxes, which cover the unemployment benefits for eligible workers who leave the company through no fault of their own.
Businesses with employees in Rhode Island pay the following taxes to the state’s Department of Labor and Training instead:
| Employer tax | Taxable wage base | Tax rate |
| Employment Security Tax | $28,200 per employee ($29,700 for employers with an experience rate of 9.49 or higher) | 0.88% for new employers |
| Job Development Fund Tax | $28,200 ($29,700 for employers with an experience rate of 9.49 or higher) | 0.21% |
| Temporary Disability Insurance Tax | $84,000 per employee | 1.1% |
Once an employer is registered with the state of Rhode Island, their employer tax rate can also be found on the quarterly tax report forms they receive from the Department of Labor and Training (more details on this below).
How to file and pay
If you haven’t already, register for a Rhode Island unemployment insurance account through the Online Registration Service. The state will then send you paper versions of your quarterly tax and wage reports (Form TX-17) about four weeks before each tax filing deadline.
File and pay employer taxes by April 30, July 31, October 31, and January 31 using the Department of Labor and Training’s online portal. Electronic filing is required for businesses with 25 or more employees. If you don’t meet this threshold, you can mail your reports and tax payments to this address:
Rhode Island Department of Labor and Training
Employer Tax Unit
1511 Pontiac Ave
Cranston, RI 02920-0942
Keep in mind that all registered employers must file quarterly reports even if they don’t pay any wages for the tax period.
Visit the Department of Labor and Training website for further details on Rhode Island’s employer taxes.
Other industry-related and local taxes
Your business may need to pay other state taxes in addition to the ones mentioned above, depending on its industry, products or services sold, or business activities. For instance, Rhode Island also levies the following taxes:
- Cigarette Tax
- Hotel Tax
- Real Estate Conveyance Tax
- Local Meals and Beverage Tax
- Bank Excise Tax
- Surplus Lines Insurance Tax
- Gross Premium Insurance Tax
Cities and municipalities in Rhode Island may also choose to levy their own taxes, including tangible personal property taxes, on companies within their jurisdictions.
Because the taxes described in this section are determined by the nature and location of your business, it’s best to talk with your tax advisor or accountant to get a complete picture of your company’s state tax obligations.
Rhode Island business tax breakdown by business type
To help make filing your state taxes easier, below we’ve included a chart that breaks down the taxes each business entity typically pays in Rhode Island. Keep in mind that pass-through entities don’t pay federal income taxes themselves—their business owners, partners, or members pay the taxes on their personal returns as well.
| Business type | Personal income tax | Partnership income tax return | Pass-through income tax | Corporate income tax | Sales and use tax | Withholding tax | Employer tax | Federal income taxes |
| C corporation | No | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes (pass-through), if not making the PTE election | Yes, if not making the PTE election | Yes, if it makes the PTE-E election | Yes, pays the minimum tax | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC | Yes (pass-through), if not making the PTE election | Depends on how it’s structured | Yes, if it makes the PTE-E election | Yes, pays the minimum tax | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes (pass-through), if not making the PTE election | Yes, if not making the PTE election | Yes, if it makes the PTE-E election | Some partnerships pay the minimum tax | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes (pass-through), if not making the PTE election | No | Yes, if it makes the PTE-E election | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
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With so many tax deadlines and guidelines to meet, it’s no wonder that this responsibility can feel overwhelming for many business owners. That’s why we’re here to help.
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