RI Rhode Island State sales tax rates

STATEWIDE SALES TAX RATE

ECONOMIC SALES THRESHOLD

$100,000

TRANSACTIONS THRESHOLD

200

Do you need to collect sales tax in Rhode Island?

You’ll need to collect sales tax in Rhode Island if you have nexus there. There are two ways that sellers can be tied to a state when it comes to nexus: physical or economic. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.

Do you have physical nexus in Rhode Island?

Rhode Island considers a seller to have physical nexus if you have any of the following in the state:

An office or place of business
An employee, representative, contractor, agent, salesperson, etc. present in the state
Goods in a warehouse, sample room, storage room, etc. present in the state
Delivery of merchandise to customers in the state in the merchant’s own vehicle(s)
Attendance at a tradeshow or craft show
Advertising in the state
A 3rd party affiliate in the state

Do you have economic nexus in Rhode Island?

Effective July 15, 2017, Rhode Island considers vendors who make more than $100,000 in sales annually in the state or more than 200 transactions in the state to have economic nexus. This means the state considers these vendors obligated to collect sales tax from buyers in the state.

A note on Rhode Island’s “notice and report” sales tax law

In 2017, Rhode Island implemented a “notice and report” sales tax law. Under this law, sellers with no nexus in the state are known as “non-collecting retailers,” and non-collecting retailers are required to take several actions if they are not sales tax compliant. This law applies to sellers who meet these requirements:

Makes more than $100,000 in gross sales from Rhode Island buyers in a calendar year OR
Makes more than 200 individual sales to buyers in Rhode Island in a calendar year

Sellers that meet this criteria are required to either a) register for a Rhode Island sales tax permit and collect sales tax from Rhode Island buyers or b) comply with Rhode Island’s rigorous reporting requirements, which can be found at the Rhode Island Department of Revenue website.

Is what you’re selling even taxable?

Services in Rhode Island are generally not taxable, though some are. Also, the furnishing of telecommunications service and cable television services is taxable in Rhode Island. And be mindful if the service you provide includes creating or manufacturing a product. In that case you may have to deal with the sales tax on products.

Tangible personal property is taxable in Rhode Island, with a few sales tax exemptions. These exceptions include certain clothing and prescription drugs, among other items.

Is SaaS taxable in Rhode Island?

SaaS is taxable in Rhode Island.

Collecting Sales Tax

Rhode Island is a destination-based sales tax state. So no matter if you live and run your business in Rhode Island or live outside Rhode Island but have nexus there, you would charge sales tax at the rate of your buyer’s ship-to location.

Fortunately, Rhode Island is one of the few states with no local sales tax rates. That means that you charge the 7% Rhode Island sales tax rate to every buyer in Rhode Island. This goes for sellers who call Rhode Island their home state and sellers who live and operate their businesses in another state, but have Rhode Island sales tax nexus for some reason.

Note: If you operate an eating and/or drinking establishment in Rhode Island, you must collect the 1% Rhode Island meals and beverage tax.

Should you collect sales tax on shipping charges in Rhode Island?

As an online seller, you will most likely need to charge sales tax on shipping charges in Rhode Island.

When are Returns Due?

When you file and pay Rhode Island sales tax depends on two things: your assigned filing frequency and your state’s due dates.

How often will you file sales tax returns in Rhode Island?

States assign you a filing frequency when you register for your sales tax permit. In most states, how often you file sales tax is based on the amount of sales tax you collect from buyers in the state.

In Rhode Island, you will generally be required to file and remit sales tax either monthly or quarterly.

Important to note: All Rhode Island sales tax filers are also required to file an annual sales tax reconciliation in January.

Rhode Island sales tax returns are generally due the 20th or the final day of the month following the reporting period. If the Rhode Island filing due date falls on a weekend or holiday, sales tax is due the next business day.