Rhode Island State Taxes: What Retirees Need to Know in 2026
Last updated 02/04/2026 • By Jason Siperstein, CFA, CFP®, RMA®
🗝️ Key Insight: Rhode Island retirees could be paying thousands more in state taxes than necessary due to little-known exemption rules. Here’s how to legally minimize what you owe and keep more of your retirement income.
As a Rhode Island financial advisor, I’ve helped hundreds of retirees navigate these rules. Here’s exactly what you need to know about Rhode Island taxes in 2026 and how to legally minimize what you owe.
Rhode Island keeps it simple with just three tax brackets, applying the same rates to both single and married filers. And unlike the federal system, both regular income and capital gains are taxed at these same rates.
As a Rhode Island financial advisor, I’ve helped hundreds of retirees navigate these rules. Here’s exactly what you need to know about Rhode Island taxes in 2026 and how to legally minimize what you owe.
Rhode Island keeps it simple with just three tax brackets, applying the same rates to both single and married filers. And unlike the federal system, both regular income and capital gains are taxed at these same rates.
Example #1:
Let’s say you’re earning $100,000 in 2026, whether you’re filing as single or married. Here’s how your Rhode Island state taxes would break down:
First $82,050 taxed at 3.75%:
$82,050 * 0.0375 = $3,076.88
Next $17,950 taxed at 4.75%:
($100,000 – $82,050) * 0.0475 = $852.63
Total State Tax:
$3,076.88+ $852.63 = $3,929.51
Social Security – When RI Can’t Touch It
Social Security Benefits: Rhode Island is one of only 8 states that taxes Social Security (thanks Rhode Island!). However, you might not owe any RI taxes if you meet ALL of the following criteria:
✅ You’ve reached Full Retirement Age (typically 66-67).
✅ Your federal adjusted gross income (AGI) includes taxable Social Security income.
✅ Your AGI is below the limit of $107,000 for single files or $133,750 for married filers.
If you are interested in learning when is the best time to claim Social Security, you may enjoy our other post:
➡️ Could You Be Losing $100,000+ in Social Security Benefits?
Social Security Benefits: Rhode Island is one of only 8 states that taxes Social Security (thanks Rhode Island!). However, you might not owe any RI taxes if you meet ALL of the following criteria:
✅ You’ve reached Full Retirement Age (typically 66-67).
✅ Your federal adjusted gross income (AGI) includes taxable Social Security income.
✅ Your AGI is below the limit of $107,000 for single files or $133,750 for married filers.
If you are interested in learning when is the best time to claim Social Security, you may enjoy our other post:
➡️ Could You Be Losing $100,000+ in Social Security Benefits?
Example #1: All Criteria Met
Sue, 67, is single. For 2025, her federal AGI is $90,000, which is made up of the following:
- $15,000 in taxable Social Security retirement benefits
- $50,000 in IRA distributions
- $25,000 from a defined benefit pension plan
Since (✅) Sue’s AGI of $90,000 is under $107,000, (✅) she has reached Full Retirement Age (FRA), and (✅) her federal AGI includes taxable income from Social Security, she won’t pay Rhode Island state taxes on her Social Security benefits.
Example #2: Criteria NOT Met
John and Barbara, both 68, are married and filing jointly (MFJ). For 2025, their combined federal AGI is $137,000, which is made up of the following:
- $20,000 in taxable Social Security retirement benefits
- $57,000 in IRA distributions
- $60,000 from a defined benefit pension plan
Even though they have both (✅) reached Full Retirement Age (FRA) and (✅) their federal AGI includes taxable income from Social Security, (⚠️) they are above the income limit. Therefore, they will pay Rhode Island state tax on the portion of their Social Security benefits that is federally taxable.
WILL RI ELIMINATE SOCIAL SECURITY TAX?
In January 2026, Governor McKee proposed eliminating Rhode Island’s Social Security tax entirely—phased out over the next three years. If the General Assembly passes it, Rhode Island would finally drop off that list of 8 states that tax your benefits (about time!). The Governor’s office estimates 9,200 early retirees would be fully exempt in year one alone.
⚠️ This is still a proposal, not law yet. So for now, the exemption rules above still apply for 2026. I’ll update this post as things move forward.
401k and Pension Income
Retirement Accounts: Rhode Island offers another valuable break for retirement accounts (i.e. 401k, 403b, annuities, pensions, etc.). Each spouse can exclude up to $50,000 from state taxes starting in tax year 2025 (BIG jump from last year) if you meet ALL requirements:
✅ Your federal AGI includes 401k plans, 403b plans, annuities, etc.
✅ You’ve reached Full Retirement Age (FRA).
✅ Your AGI is below the limit of $107,000 for single files or $133,750 for married filers.
⚠️ IRAs (of any type) are not eligible for this RI tax break.
Retirement Accounts: Rhode Island offers another valuable break for retirement accounts (i.e. 401k, 403b, annuities, pensions, etc.). Each spouse can exclude up to $50,000 from state taxes starting in tax year 2025 (BIG jump from last year) if you meet ALL requirements:
✅ Your federal AGI includes 401k plans, 403b plans, annuities, etc.
✅ You’ve reached Full Retirement Age (FRA).
✅ Your AGI is below the limit of $107,000 for single files or $133,750 for married filers.
⚠️ IRAs (of any type) are not eligible for this RI tax break.
Example #1: All Criteria Met
Kirby and Elaine, both 68, are married and filing jointly. For 2025, their combined federal AGI is $120,000, which includes income from their retirement accounts. Their AGI is made up of the following:
- $30,000 from John’s 401(k)
- $40,000 from Mary’s 401(k)
- $50,000 from John’s defined benefit pension plan
Since both Kirby and Elaine (✅) have income from 401(k) plans, (✅) reached Full Retirement Age (FRA), and (✅) their AGI is less than $133,750, each spouse can exclude up to $50,000 from state taxes on their retirement income.
Example #2: Criteria NOT Met
David, 69, and Susan, 61, are married and filing jointly. For 2025, their combined federal AGI is $100,000, which includes income from their retirement accounts. Their AGI is made up of the following:
- $30,000 from David’s IRA
- $40,000 from Susan’s SEP IRA
- $30,000 in dividends from a joint brokerage account
Neither David nor Susan can exclude any income from state taxes. While they pass (✅) the income screen and (✅) David passes the FRA screen, they don’t meet all requirements:
⚠️ IRAs (of any type) do not qualify for the Rhode Island state tax exemption.
⚠️ Susan has not reached Full Retirement Age (FRA).
Military Pensions
Military Service Modification: If you receive a military pension, you’re in luck. Rhode Island doesn’t tax military retirement pay at all. There are no age limits, no income limits, and the exemption continues for surviving spouses. To qualify:
✅ Your federal AGI must include the military pension.
Military Service Modification: If you receive a military pension, you’re in luck. Rhode Island doesn’t tax military retirement pay at all. There are no age limits, no income limits, and the exemption continues for surviving spouses. To qualify:
✅ Your federal AGI must include the military pension.
Example #1: All Criteria Met
Michael, 72, and his wife, Laurie, 70, are married and filing jointly. For 2026, their combined federal AGI is $210,000, which includes various sources of income. Their AGI is made up of the following:
- $30,000 from Michael’s military pension
- $70,000 from Emily’s 401(k) distributions
- $10,000 from Michael’s IRA distributions
- $65,000 in dividends from a joint brokerage account
- $25,000 from a part-time consulting job Michael took on after retirement
Despite their diverse income sources, Michael’s military pension is fully exempt from Rhode Island state taxes. This exemption applies regardless of their total AGI or their ages. If Michael passes away, Laurie, as the surviving spouse, will continue to benefit from this exemption, and the military pension will remain fully exempt from Rhode Island state taxes.
The All-or-Nothing Rule
Here’s what catches many retirees off guard: these exemptions have hard cutoffs. If you’re even $1 over the income limits, you lose the entire exemption. This makes income planning crucial. If you’re close to the thresholds, consider:
✅ Timing your IRA withdrawals
✅ Making charitable donations to reduce your income
✅ Coordinating withdrawals with your spouse
Frequently Asked Questions
Currently, Rhode Island is one of only 8 states that taxes Social Security benefits. You may qualify for a complete exemption if you meet specific age, income source, and income limit requirements.
In January 2026, Governor McKee proposed eliminating Rhode Island’s Social Security tax entirely—phased out over the next three years.
The 2025 income limits are $107,000 for single filers and $133,750 for married filing jointly. These are hard cutoffs – exceeding the limit by even $1 eliminates the entire exemption.
2026 numbers will be published around November.
No, IRAs of any type (traditional, Roth, SEP, SIMPLE) do NOT qualify for Rhode Island’s retirement account tax exemption. Only 401(k)s, 403(b)s, annuities, and pensions are eligible.
In 2026, each spouse can exclude up to $50,000 from eligible retirement accounts (401(k), 403(b), annuities, pensions) if they meet all requirements: reached Full Retirement Age, have qualifying income, and stay under the income limits.
This is a big increase from the $20,000 exclusion in 2025.
You lose the entire exemption. Rhode Island’s tax exemptions follow an “all-or-nothing” rule with hard income cutoffs, making strategic income planning crucial.
No, military pensions are completely exempt from Rhode Island state taxes with no age limits, income limits, or other restrictions. The exemption continues for surviving spouses.
Ready to optimize your Rhode Island tax strategy? Don’t let strict income limits cost you thousands in unnecessary taxes. Schedule a complimentary consultation to navigate these complex rules and maximize your retirement income.
By Jason Siperstein, CFA, CFP®, RMA®
Jason Siperstein is a fee-only financial planner that specializes in retirement planning. He is based in Rhode Island and serves clients locally and across the country. Jason is called on by local and national news to share his insights.
