SmartAsset: Central Falls most tax-friendly retirement spot in R.I.

CENTRAL FALLS ranks highest for tax friendliness for retirees in Rhode Island, according to SmartAsset. / COURTESY SMARTASSET
CENTRAL FALLS ranks highest for tax friendliness for retirees in Rhode Island, according to SmartAsset. / COURTESY SMARTASSET

CENTRAL FALLS – Central Falls is the most tax-friendly retirement spot in Rhode Island, according to income tax and property taxes paid, SmartAsset said.
Central Falls may not be the first place in Rhode Island that one would think of to retire, but it topped the financial technology company’s list for low property taxes, at $2,601. Westerly, home to Watch Hill, placed second. The median property taxes paid there were pegged at $2,844.
The rest of the top 10 tax–friendly retirements spots are: Woonsocket, Pawtucket, Providence, Warwick, East Providence, Tiverton, Newport and the Greenville section of Smithfield.
SmartAsset said Rhode Island, with a land area of 1,045 miles, is mostly surrounded by water, making it appealing to retirees, but “its retirement taxes might be cause to think twice.”
It said that unlike most other states, Rhode Island provides no special income tax exemptions or deductions for retirement income. It said even Social Security retirement benefits are taxable, as long as they also are taxed federally. (The study did not take into account legislation passed in the most recent General Assembly session that exempts from state income tax Social Security benefits for single filers with federal adjusted gross income of up to $80,000 and for joint filers of up to $100,000.)

“On top of that, Rhode Island has property taxes that rank among the 10 highest of any state,” SmartAsset said. (The Rhode Island Public Expenditure Council pegged the Ocean State as fourth-highest in the nation for property taxes collected per $1,000 of personal income in its most recent “How Rhode Island Revenues Compare” report.)

Overall, SmartAsset said the Ocean State is not tax-friendly for retirees.
To determine a community’s tax friendliness, SmartAsset said it studied how tax policies of each city would affect a retiree with a $50,000 income – $15,000 from Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings like a 401(k) and $10,000 in wages. Deductions and exemptions were applied, as well as whether or not Social Security income was taxable. U.S. Census data was used to identify median property taxes paid by homeowners. SmartAsset then ranked and indexed cities by income tax and property tax paid.

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