RI Has 8th Highest Tax Rates in the U.S.

With the tax filing deadline of April 15 just around the corner, a new study shows that Rhode Islanders are not going to get much of a break.

According to WalletHub, Rhode Island has the 8th highest tax rates in the U.S., ranking 44th out of 51 overall.

“Every year, the average U.S. household pays more than $7,800 in federal income taxes, according to the Bureau of Labor Statistics. And while we’re all faced with that same obligation, there is significant difference when it comes to state and local taxes. Taxpayers in the most tax-expensive states, for instance, pay three times more than those in the cheapest states,” said WalletHub.

Rhode Island Governor Gina Raimondo’s Fiscal Year 2020 budget proposal has been widely criticized for increasing taxes and fees. — and not just from Rhode Islanders.

After Raimondo’s proposed beach and campground increase was called a “regressive tax on the poor” by politicians and economists in Rhode Island, the Wall Street Journal called out Raimondo in its recent editorial, “Nickel and Diming Democrats,” after Connecticut Governor Ned Lamont introduced truck tolls to address the state’s fiscal issues.

“From coast to coast, they’re taxing anything that moves,” wrote the WSJ Editorial Board.

RI’s Numbers

49th - Highest State Cigarette Tax Rates

Highest State Cigarette Tax Rates 13.21% - Effective Total State and Local Tax Rates on Median U.S. Household

Effective Total State and Local Tax Rates on Median U.S. Household $7,672 - Annual State & Local Taxes on Median U.S. Household

Annual State & Local Taxes on Median U.S. Household 22.81% - Difference Between State and U.S. Average

Difference Between State and U.S. Average $8,667 - Annual State and Local Taxes on Median State Household

The Rankings

Rhode Island ranks behind Iowa and Ohio, who rank 42nd and 43rd overall.

RI ranks ahead of Wisconsin and Kansas, who rank 45th and 46th overall.

Alaska has the lowest tax rates, while Illinois has the highest.

See the full rankings in the map below

The Method

In order to identify the states with the highest and lowest tax rates, WalletHub compared the 50 states and the District of Columbia across four types of taxation:

Real-Estate Tax: WalletHub first divided the “Median Real-Estate Tax Amount Paid” by the “Median Home Price” in each state. We then applied the resulting rates to a house worth $193,500, the median value for a home in the U.S., in order to obtain the dollar amount paid as real-estate tax per household.

WalletHub first divided the “Median Real-Estate Tax Amount Paid” by the “Median Home Price” in each state. We then applied the resulting rates to a house worth $193,500, the median value for a home in the U.S., in order to obtain the dollar amount paid as real-estate tax per household. Vehicle Property Tax: WalletHub examined data for cities and counties collectively accounting for at least 50 percent of the state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, we assumed all residents own the same car: a Toyota Camry LE four-door sedan, 2018’s highest-selling car, valued at $24,350, as of March 2019.

WalletHub examined data for cities and counties collectively accounting for at least 50 percent of the state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, we assumed all residents own the same car: a Toyota Camry LE four-door sedan, 2018’s highest-selling car, valued at $24,350, as of March 2019. Income Tax: WalletHub used the percentage of income (middle income rate) spent on income tax from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $58,082.

WalletHub used the percentage of income (middle income rate) spent on income tax from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $58,082. Sales & Excise Tax: WalletHub used the percentage of income (middle income rate) spent on sales and excise taxes from WalletHub’s Best States to Be Rich or Poor from a Tax Perspective report. “Income” refers to the mean third quintile U.S. income amount of $58,082.

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