Tax Foundation: R.I. 16th in nation for tax collections per capita in FY21

PROVIDENCE – Rhode Island and its municipalities collected $6,489 in tax per capita in fiscal 2021, the 16th highest in the nation, according to a study by the Tax Foundation published Tuesday.

The international research think tank based in Washington, D.C., studied state and local tax collections in each state as of fiscal year 2024, the most recent year for which full state-by-state data is available. Data showed since fiscal year 2019, the last full fiscal year before the pandemic, state and local tax collections nationwide have risen more than 27%. Much of that gain is subsumed by inflation, but even after adjusting for inflation, state and local tax revenues are more than 7 percent higher than they were pre-pandemic.

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Revenue nationwide soared in fiscal 2021, jumping a full 10% higher than pre-pandemic figures, data showed. The numbers edged even higher in fiscal 2022 before dropping a bit in fiscal 2023.

The Tax Foundation said almost every state has adopted tax cuts since the start of 2021, including 25 that have cut individual income tax rates since then. Legislators wanted to return some of the revenue growth to the taxpayer — and even with that, revenue remains up, the foundation said.

The study found that recent revenue declines are concentrated in California and New York, high-tax states with intense reliance on high marginal income tax rates. Not only are these states more vulnerable to income fluctuations among high earners, but in an increasingly mobile environment, they’re driving some of those high earners to other states as well, the Tax Foundation said.

The foundation said fiscal 2021 is the most recent year for which full state-by-state tax revenue data are available.

That year, New York was top in the nation, collecting $10,266 per capita in state and local tax. Connecticut was second, collecting $9,458 per capita, followed by California and New Jersey. Massachusetts was fifth, collecting $8,103 per capita.

Alaska had the lowest tax collections, according to the study. That state collected $4,192 per capita, followed by Alabama ($4,245), Tennessee ($4,272) and Florida ($4,405).

Washington D.C. surpassed all states with $13,278 in per capita tax collections.

In New England, Vermont ranked No. 7 ($7,552 per capita), Maine No. 12 ($6,825), and New Hampshire No. 25 ($5,426).