If you own a company in Rhode Island—or want to start a brand-new business—there are some helpful state tax incentives and credits you should know about. What Rhode Island lacks in siz, it makes up for in business resources.
Keep reading for a list of tax credits, incentive programs, and exemptions (plus a powerhouse link to all the state’s funding options).
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Rhode Island business tax credits and incentives
Hiring and training tax credits and incentives
Qualified Jobs Incentive Program
Rhode Island’s Qualified Jobs Incentive Program rewards companies for hiring new employees or relocating employees from out of state. The tax credits are up to $7,500 per new job per year, depending on factors like wage level.
Most businesses must create or relocate at least 10 jobs to qualify for the incentive, but the exact number depends on your business’s industry and size. Rhode Island encourages companies in the following target industries to apply:
- Biomedical innovation
- IT/software
- Cyber-physical systems
- Data analytics
- Defense shipbuilding and maritime
- Advanced business services
Learn more about the program and download the application here.
Non-Traditional Apprenticeship Incentive Program
The Non-Traditional Apprenticeship Incentive Program gives Rhode Island employers a cash incentive for hiring non-trade apprentices in their workplaces. Non-trade apprentices include people training in fields like healthcare, tech, or the arts.
The incentive amount is $1,000 per non-trade apprentice, up to $5,000 per year. Apply for the program here.
Business Corporation Tax Credit
With the Business Corporation Tax Credit, employers that hire apprentices in specific fields can get a tax credit of 50% of their apprentice’s actual wages or $4,800, whichever is less. To qualify, the apprentice must be enrolled in a registered program through the Rhode Island Department of Labor and Training’s State Apprenticeship Council.
Qualified apprentice jobs include but aren’t limited to: machine toolmaker, machinist, model-maker, gage maker, pattern-maker, plastic process technician, tool and machine setter, die-sinker, mold-maker, and tool and die maker.
Get more information on the credit here.
New Employment Tax Incentive
Rhode Island businesses can take a tax incentive for hiring employees who are Rhode Island residents and who’ve previously been unemployed. The incentive is 40% of the employee’s first-year wages, up to $2,400 per employee.
To qualify for the credit, businesses need to have retained the employee for at least 52 consecutive calendar weeks with a minimum of 1,820 hours of paid employment. Find instructions on how to apply for the credit here.
Adult Education Tax Credit
The Adult Education Tax Credit gives corporations in Rhode Island a tax credit for investing in vocational training or basic education for their employees. The credit is 50% of the direct costs of the training, up to $300 per employee, with a maximum of $5,000 in credits per year.
To qualify for the credit, your business has to retain the employee for 13 consecutive weeks and a minimum of 455 hours of paid employment. Download the application form here.
Need practical hiring advice? Gusto’s guide to hiring employees in Rhode Island has you covered.
Growth and development tax credits
Rebuild Rhode Island Tax Credit
This program gives businesses in targeted industries tax credits for taking on construction projects within the state. Commercial office, industrial, residential, mixed-use development, ground-up construction, and historic rehabilitation projects all qualify for the credit, as long as the minimum project cost is $5 million.
The credit is equal to 20-30% of the total project costs. And certain projects can also qualify for sales tax exemptions on purchases of construction materials, furnishings, and equipment.
Businesses in the following target industries can apply:
- Biomedical innovation
- IT/software Cyber-physical systems
- Data analytics
- Defense shipbuilding and maritime
- Advanced business services
- Design, food, and custom manufacturing
- Transportation, distribution, and logistics
- Arts
- Education
- Hospitality and tourism
Get more information on the tax credit here.
Research and Development Expense Credit
Rhode Island’s Research and Development (R&D) Expense Credit incentivizes businesses to invest in qualified R&D activities within the state. Corporations that incur qualifying research expenses can take a credit of 22.5% of their expenditures up to $111,111.00. For expenditures over that amount, the credit is 16.9%.
Download Rhode Island’s R&D form here.
Plus, get details on how the federal R&D credit works.
Donation tax credits
Educational Assistance and Development Credit
Businesses can get tax credits for contributing to a Rhode Island institution of higher education to help establish or maintain a faculty chair, department, work fellowship, or scientific research or education program.
The credit amount is 8% of the contribution amount over $10,000. You can apply the tax credit against your corporate income tax, bank excise tax, or insurance tax. Download the tax credit form here.
Related: Get the full breakdown on your Rhode Island business taxes.
Industry-specific tax credits
Motion Picture Production Tax Credit
Active through 2029, the Motion Picture Production Tax Credit is available to production companies that set their film projects in Rhode Island. The credit amount is equal to 30% of a production’s costs incurred within the state.
To qualify, the production’s primary locations must be within Rhode Island, and the total production budget should be at least $100,000. Get more information on how to apply at the Rhode Island Film and TV Office.
Musical and Theatrical Production Tax Credit
Individuals and production companies that received an accredited theatre production certificate can take the Musical and Theatrical Production Tax Credit. The credit amount is equal to 30% of musical theatre production and performance expenditures incurred in Rhode Island.
Learn more about the credit on the Rhode Island Film and TV Office’s website.
General tax credits
Disabled Access Credit for Small Businesses
Rhode Island’s Disabled Access Credit gives small business owners a tax credit for taking steps to comply with federal and state guidelines for supporting people with disabilities. The credit amount is equal to 10% of the total expenses a business invests in making changes. Those changes can include:
- Removing physical, architectural, and transportation or communication-related barriers for people with disabilities
- Providing qualified interpreters to people with hearing impairments
- Making readers, tapes, or other materials available to people with visual impairments
- Providing job coaches or otherwise supporting people who have severe impairments that may affect their employment
- Providing specialized transportation services to employees or customers with mobility impairments
- Buying or modifying equipment for people with disabilities
- Providing similar services, modifications, materials, or equipment for people with disabilities.
To qualify, a small business must have had 30 or fewer employees in the previous year and $1 million or less in gross receipts. Learn more about the credit here.
Child and Adult Daycare Tax Credit
Rhode Island businesses can get a tax credit for sponsoring or providing adult or child daycare services for their employees’ dependents. The credit is 25% of the total amount a business spends to purchase daycare services, and 25% of the total amount expended to provide daycare services.
The maximum credit allowed is $30,000 per year. Download the credit application form here.
Business tax reductions and exemptions
In addition to their tax credits and incentives, Rhode Island also has a variety of tax exemptions and reductions for businesses in specific industries. The state has notable sales tax exemptions on:
- Farm equipment and farm structure construction materials
- Manufacturing fuels and raw materials
- Manufacturing machinery and equipment
- Wine and spirits
- Scientific equipment
- Pollution control equipment
- Aircrafts, boats, and aircraft fuel
- Tangible personal property sold by professional and occupational services
Rhode Island municipal business incentives
The different counties and municipalities in Rhode Island each offer their own business incentives, tax credits, and tax exemptions. Check the list on page 21 of the CommerceRI’s business incentives PDF guide, or search your city’s website for more information.
Rhode Island business financing
If you need additional capital to expand your business or maintain regular operations after a setback, Rhode Island’s state resources can help. Check out Gusto’s guide to business grants and loans in the Ocean State for a list of funding options.
