Town of Portsmouth, RI

RHODE ISLAND TAX ADVANTAGES

Rhode Island Tax Advantages

Rhode Island's business tax incentives are the result of combined public and private efforts to stimulate and strengthen Rhode Island's economy. Rhode Island offers one of the most attractive tax incentive packages in the United States, with these key features:

• Rhode Island has only two levels of taxation: State and Municipal.
• Corporations pay only one business tax to the State which uses the U.S. Form 1120 as basis.
• Affiliated multi-state corporations may file single separate Rhode Island corporate returns or file a consolidated return. In either case, the net income/net worth is subject to apportionment.
• Rhode Island allows both Limited Liability Corporations and S-Corporations and their pass through tax benefits.
• Manufacturers' production machinery and equipment is exempt from the Sales/Use Tax.
• Goods consumed in the manufacturing process are exempt from sales tax.
• Manufacturers' inventories are exempt from property taxes.
• Manufacturers receive a 4 percent Investment Tax Credit. On January 1, 1998, our ITC for high performance firms rises to 10%, highest in the nation.
• High Performance "Manufacturing" and "traded service" firms may receive a 10% tax credit on equipment.
• Manufacturers' machines used in production are exempt from property tax.
• Manufacturers investing significantly in worker training will be able to take a 10 percent credit on all purchased or leased equipment.
• Corporate Income Tax Rate Reduction: The Rhode Island Jobs Development Act grants incremental income tax reductions to companies that create new employment in this state between July 1, 1994 and July 1, 1999.
• Enterprise Zone Tax Credits.
• Research and Development firms receive a 10 percent Investment Tax Credit.
• Research and Development firms receive a 22.5 percent research and development Expense Tax Credit.
• Equipment used for Research and Development is exempt from sales tax.
• Research and Development facilities are allowed a one year tax write-off.
• A small business may take a tax credit equal to any guaranty fee they pay to the United States Small Business Administration pursuant to obtaining SBA financing.
• Rhode Island Job Training Credit for existing employees up to $5,000 for each employee within a three-year period.
• Rhode Island allows financial institutions to allocate income.
• There is no intangible property tax.
• Rhode Island allows a five year carryover of net operating losses.
• Rhode Island does not impose any form of unitary tax.
• Rhode Island's apportionment formula uses only sales shipped to Rhode Island in the sales portion of the gross receipts part of the formula.
• A corporation's investment income may be exempt from the Rhode Island income tax if it confines its activity to the maintenance and management of its passive intangible assets, maintains an office in Rhode Island, and employs at least five persons in Rhode Island.
• Income Allocation Modification for Manufacturers of Medical Instruments and Supplies and Drugs.
• Rhode Island follows federal depreciation guidelines.
• Rhode Island FSC's are exempt from the business corporation tax.
• Air and water pollution control equipment is exempt from the sales tax.
• Utilities used in manufacturing are exempt from the sales tax.
• Alternative fuels equipment tax credit.
• Alternative fuels used by fleets of 10 or more vehicles is exempt from sales and motor fuel tax.
• Air and water pollution control equipment is exempt from local property taxes for 10 years.
• The estate tax due is an amount equal to the Federal credit. Rhode Island has no gift tax.
• Educational Assistance and Development Credit.
• Adult Education Tax Credit.
• Child & adult daycare assistance and development tax credit.
• Tax Incentives for Employers to hire unemployed Rhode island Residents.
• Disabled Access Expense Credit for Small Business (Up to $1,000 per year)
• Employees of a qualified Rhode Island company are exempt from Rhode Island personal taxes on the capital gains derived from the stock or bonds of their company.
• Employees of a qualified Rhode Island Software Company are exempt from Rhode Island personal taxes on the capital gains derived from the stock or bonds of their company.

  For more information on incentives Link to:

• Rhode Island Business Incentives

  For more information on State Taxes and tax Forms Link to:

• Rhode Island Division of Taxation
  • For Additional Information
    Tax Administrator
    Rhode Island Division of Taxation
    One Capitol Hill
    Providence, RI 02908-5800
    (401) 277-2905ß

To Contact The Corporation

E-mail riedc@riedc.com

Or write:
Rhode Island Economic Development Corporation
One West Exchange Street
Providence, Rhode Island 02903
Expansion Services Phone: (401) 277-2890
Phone: (401) 277-2601
Fax: (401) 277-2102