Tax Foundation: R.I. state sales tax second highest in country

RHODE ISLAND’S state sales tax was the second highest in the country as of July 1, according to a new report by the Tax Foundation. / COURTESY TAX FOUNDATION

PROVIDENCE – Rhode Island’s state sales tax remains one of the highest in the country, according to a new report by the Tax Foundation.

The Ocean State’s 7% state sales tax was the second highest of states nationwide as of July 1, tied with Indiana, Mississippi and Tennessee, according to the analysis of state and local sales taxes published July 18.

However, Rhode Island’s lack of local sales tax means its combined state and local tax rate ranked No. 24 out of the 50 states and the District of Columbia, according to the report.

The $13.6 billion state budget for the fiscal 2023 year that began July 1 maintains the same sales tax rate as the prior year.

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Cuts to state sales tax rates are rare – lawmakers typically cut income tax rates instead, according to the report, which means yearly rankings remain consistent. New Mexico was the only state to reduce its sales tax rate in 2022 – down an eighth of a percent – marking the first state sales tax cut in five years, according to the report.

The rankings only take into account the tax rates but not what those taxes are applied to, which can vary widely across states. For example, some states do not apply sales taxes to groceries, or clothing.

The latest rankings were calculated based on quarterly state and local sales tax information, as well as 2010 census data.

Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.

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