RHODE ISLAND is “particularly tough” but not the worst for retirees, according to a report by business forecast and personal finance publication Kiplinger. For a larger version of this map, click HERE.
WASHINGTON – Rhode Island is “particularly tough on retirees” according to a report by business forecast and personal finance publication Kiplinger.
The Ocean State taxes up to 85 percent of Social Security benefits similar to the way the federal government does and it taxes “virtually all other sources of retirement income,” according to Kiplinger.
While railroad retirement benefits are exempt, which is true for every state, out-of-state government pensions are fully taxed.
As of January 2011, Rhode Island revised its income tax withholding rates, brackets and withholding allowances. The revision expanded tax brackets and lowered the top marginal income-tax rate from 9.9 percent to 5.99 percent.
The state has the fifth-highest median real estate tax in the United States, according to the Tax Foundation and it treats capital-gains income as ordinary income for tax purposes.
Although Rhode Island’s tax policies don’t make it a monetary safe haven for retirees, it was spared from Kiplinger’s list of the 10 least tax-friendly states for retirees in the U.S. In order, from worst to less bad, were Vermont, Minnesota, Nebraska, Oregon, California, Maine, Iowa, Wisconsin, New Jersey and Connecticut.
In no specific order, Alabama, Delaware, Georgia, Louisiana, Mississippi, Oklahoma, Pennsylvania, South Carolina, Tennessee and Wyoming were named the top 10 most tax-friendly states in the U.S. by Kiplinger.