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!
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:
To calculate Sales Tax in Rhode Island, follow the steps below:
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:
Out of State Seller is eligible to register, collect and remit sales tax under Rhode Island Law, if:
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:
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:
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:
Our calculator will automatically calculate the result and represents it in 3 different forms, as shown in the image below:
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.
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%
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:
Our calculator will automatically calculate the result and represents it in 3 different forms.
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.