Sales Tax and Reverse Sales Tax Calculator Rhode Island

RHODE ISLAND [Multidirectional Calculator]
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Rhode Island – RI Sales Tax Calculator: User Guide

Rhode Island is a state situated in the United States' New England region, with the official name of the State of Rhode Island and Providence Plantations. The state shares its borders with the Atlantic Ocean to the south, Connecticut to the west, Massachusetts to the north and east, and has a small maritime border with New York.

State of Rhode Island and Providence Plantations is the seventh least populous, the second-most densely populated, and the smallest state by area among the 50 states in the US.

The state packs quite the punch. It has 400 miles of pristine coastline, some of the best beaches on the East Coast, countless bays, charming seaside towns, unique cities, delicious seafood, a flourishing economy, and numerous business and job opportunities. All these perks attract several people to settle in the state to start their new life and career.

Are you mulling over to expand, relocate, or start your business in Rhode Island? Well! You are in the right spot. This guide will walk you through all the essentials of Rhode Island Sales Tax, one of the essential factors you will deal with for your business in this state.

So, without wasting more of your precious time, let's dig in!


Rhode Island Sales Tax Facts:

  • Rhode Island levies 7% of sales tax on the state level. Fortunately, no county, city, or municipality is allowed to levy a local sales tax. So the state tax rate remains the same throughout the state.
  • Consumers use tax, rental tax, sales tax, sellers use, lodgings tax are some of the common types of sales taxes levied in the state.
  • Non-prepared food (i.e., groceries), medical equipment including prosthetic devices and wheelchairs, clothing, newspapers, and periodicals, and prescription drugs are among items that are exempted from sales tax.
  • 13% of the special sales tax rate is levied on Hotel and motel rentals.
  • 8% of the special sales tax rate is charged on bars, restaurants, and other eating or drinking establishments.
  • Furnishing of telecommunications service and cable television services are among the services which are taxable in the state.
  • Selling, renting, or leasing most tangible personal property at retail are subjected to Rhode Island Sales tax. These tangible personal properties include craft items, antiques, jewelry, computers and computer software, home appliances, household furnishings, VCR's & tapes, and stereo & TV equipment.
  • Cigarette, Alcohol, and Gasoline are also subjected subject to the excise tax.
  • Businesses and Individuals purchasing items for resale, improvement, or raw materials can buy them tax-free using the Rhode Island Sales Tax Exemption Form.
  • Individuals and businesses purchasing taxable goods and services without paying Rhode Island tax but to be used within Rhode Island must be subjected to State Use Tax.

How to calculate Sales Tax in Rhode Island?

Businesses and Sellers involved in the retail sale, rental, or lease of many goods and services and having Nexus in Rhode Island are required to register for Rhode Island Sales tax. They must collect, manage, and remit it to the Rhode Island Division of Taxation while staying in compliance with state laws and avoid penalties and interest.

The sales tax determined on four factors:

  1. Nexus: It is a connection of business with a state. The business is only liable to pay taxes to the states with Nexus.
  2. Out of State Seller's Eligibility: Out of State Sellers are only required to register, collect, and remit the sales tax to the state's authorities if it falls under the criteria provided by the state.
  3. Location and Products or Services: Generally, the sales tax rate varies from product to product and location to location. However, in Rhode Island, it would remain the same throughout the state as there is no local sales tax.
  4. Exemptions: Almost all goods are eligible for sales tax regulation—however, Non-prepared food (i.e., groceries), medical equipment including prosthetic devices and wheelchairs, clothing, newspapers, and periodicals, and prescription drugs are exempted under Rhode Island Law. So you should check with the Rhode Island state government as to which goods and services sold in Rhode Island are subject to sales tax.

To calculate Sales Tax in Rhode Island, follow the steps below:

Step 1 – Determine your Nexus:

As a business owner, you are only required to collect sales tax if you are eligible for collecting sales tax and have Sales Tax Nexus in the Rhode Island State. And to determine your Nexus in Rhode Island, you must have any of the following:

  • Having a physical location in Rhode Island, such as an office or other business locations.
  • An employee, agent, independent contractors, or other sales representative working for you in Rhode Island.
  • Having an inventory or ownership of goods in a warehouse, sample room, storage facility, etc. In RI.
  • Delivery of merchandise in Rhode Island in vehicles owned by the merchant.
  • Attendance at a craft show or trade show.
  • Advertizing in Rhode Island
  • Having a Click-through Nexus - A 3rd party affiliate in Rhode Island.


Step 2 – Determine the eligibility to collect sales tax as an out-of-state seller:

Out of State Seller is eligible to register, collect and remit sales tax under Rhode Island Law, if:


  1. Fulfilling any of the points as mentioned above, Or;
  2. Having an Economic Nexus where remote sellers make more than $100,000 in sales annually or 200 or more transactions in Rhode Island in the previous calendar year.

Step 3 – Determine the Sales Tax Rate:

Once you have determined that your Nexus is with Rhode Island, next is to deduce the Sales Tax rate (State + County + City) applicable to your product, for which you can refer the points below:

  • The state levies 7% of sales tax on the state level. Fortunately, no county, city, or municipality is allowed to levy a local sales tax. So the state tax rate remains the same throughout the state.
  • 13% of the special sales tax rate is levied on Hotel and motel rentals.
  • 8% of the special sales tax rate is charged on bars, restaurants, and other eating or drinking establishments.
  • Some other tangible properties and services may be subjected to a special sales tax rate or exempted from it. Wherefore, you must keep yourself updated from the Rhode Island Division of Taxation.

Step 4 – Calculate Sales Tax:

After determining the sales tax rate according to the location and type of purchases, it is easy to calculate the sales tax amount charged on the product and gross price (amount after tax) of a product.


Example # 1:

For instance, you sell a Gaming Motherboard on your store in Charlestown, Rhode Island, having a net cost of $350. The amount of Sales Tax that you have to pay on the Gaming Motherboard would be:


Manual Method:

Net Price (amount before Tax) of a Gaming Motherboard: $350

Total Sales Tax rate: 0.00% (Charlestown) + 0.00% (Washington County) + 7.00% (Rhode Island State) = 7.00%


Total Sales Tax amount = $350 x 7.00% = $24.5

Gross Price (Amount after Tax) = 350 + 24.5 = $374.5


The sales tax amount charged on the Gaming Motherboard would be $24.5, raising its gross cost to $374.5.


Using our Sales Tax Calculator:

All of the steps mentioned above can be skipped to get an instant result using our Sales Tax Calculator. All you need is:

  1. Input the $350 Net Price of a Gaming Motherboard as Amount Before Tax
  2. Input or select 00% of the combined Sales Tax rate on the Tax Rate menu.

Our calculator will automatically calculate the result and represents it in 3 different forms, as shown in the image below:

rhode-island-sales-tax-calculator

Reverse Sales Tax Calculation

In the example above, we have explained to you to calculate the Sales Tax amount payable in a product and the Gross Price of the Product.

But there are times when you must deduce how much Sales tax you have paid on a product in Rhode Island.

This is where the Reverse Sales Tax Calculation Kicks in. And luckily, our Rhode Island Sales Tax Calculator can perform this calculation like a Pro.

Example:

The gross cost (amount after tax) of a Laptop Charger is $75, which you sell on your store in Barrington, Rhode Island. If you want to deduce the amount of sales tax you have actually paid on it and the net cost (amount before tax) of a Laptop Charger, you can follow the following steps:

Gross Price (Amount after Tax) of Laptop Charger: $75

Total Sales Tax rate: 0.00% (Barrington) + 0.00% (Bristol County) + 7.00% (Rhode Island State) = 7.00%


Manual Method:

Gross Price with sales tax = [Net Price × (tax rate in decimal form + 1)]

75 = [Net Price x ((7/100) + 1)]

75 = Net Price x 1.07

$70 = Net Price


So the original Price (net price) of the Laptop Charger would be $70.


Using our Sales Tax Calculator:

You can also use our Sales Tax Calculator for Reverse Sales Tax calculation to skip the aforementioned manual method. All you need is:

  1. Input the $75 Gross Price of Laptop Charger as Amount after Tax
  2. Input or select 7.00% of combined Sales Tax Rate on the Tax Rate

Our calculator will automatically calculate the result and represents it in 3 different forms.

Also Check: Rhode Island Paycheck Calculator to Calculate your Paycheck in Rhode Island State including all taxes and take home pay.

FAQs

Answer: Selling, renting, or leasing of most tangible personal property including craft items, antiques, jewelry, computers, and computer software, home appliances, household furnishings, VCR's & tapes, and stereo & TV equipment as well as some services like furnishing of telecommunications service and cable television services are subject to Rhode Island sales tax.

Answer: Only Non-prepared food is exempted from sales tax, rest are subjected to 7% of Rhode Island Sales Tax.

Answer: labor or service charges, which are stated separately, are not taxable in Rhode Island – RI.

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