How Expensive Is It to Live in Rhode Island?

The cost of living in Rhode Island is consistently higher than the national average, with an index often reported between 112% and 113%. This makes it one of the more expensive states in the U.S. Various factors, including housing, local taxes, and geography, influence this elevated cost profile. Understanding these financial aspects is important for those considering a move to the Ocean State.

Major Living Expenses

Housing represents a significant portion of living expenses in Rhode Island, often exceeding national averages. The average monthly rent ranges from $1,821 to $2,250, depending on the specific city and type of residence. Cities like Providence and Newport typically feature higher rental prices, while smaller towns might offer more affordable options.

For homeownership, the median home price was around $520,000 as of June 2025, though this figure can fluctuate. Property tax considerations also add to costs, with the median annual payment ranging from $4,518 to $4,776.

Utility costs also contribute to the overall expense of living. The average monthly utility bill can be around $439, though some reports indicate a range up to $521.98 when including internet and cable. Electricity bills average about $254 per month for residential customers. Energy costs in Providence can be about 25% higher than the national average, with monthly bills around $280.63.

Food expenses generally align slightly above the national average. The average monthly grocery bill for an individual is approximately $390. Groceries are about 10% pricier than the national average. Dining out also adds to food costs; a dinner for two at a mid-range restaurant might cost around $75.

Transportation costs are a substantial component of living expenses. A single adult might spend upwards of $4,400 annually. Gasoline prices typically hover around $2.96 to $3.43 per gallon. Car insurance rates generally fall within an annual range of $1,830 to $2,960 for full coverage. Public transportation is available through the Rhode Island Public Transit Authority (RIPTA). Fares include a cash fare of $2.00 per ride, a day pass for $6.00, a 7-day pass for $25.00, and a monthly pass for $70.00. Reduced fare programs are offered for qualifying low-income seniors and individuals with disabilities.

Healthcare expenses tend to be higher than the national average. The average annual cost of health insurance per person is around $7,903. For families with employer-sponsored plans, the average premium reached $22,955 in 2022. For seniors, the average cost for in-home care is approximately $5,720 per month.

Miscellaneous expenses also factor into the overall cost of living. Childcare can cost upwards of $13,000 annually for one child. Elder care, such as in-home services, can exceed $4,500 per month, depending on the level of assistance required.

Rhode Island’s Tax Landscape

Rhode Island operates a progressive state income tax system. For the 2024 tax year, income tax rates range from 3.75% to 5.99%. The lowest rate applies to income up to $77,450, with the highest rate applying to taxable income exceeding $176,050.

The state imposes a uniform sales tax rate of 7% statewide. Certain items are exempt from sales tax, including most unprepared foods, prescription drugs, and the majority of clothing and footwear. Digital services and Software as a Service (SaaS) are subject to the 7% sales tax.

Property taxes are administered at the local municipal level, with each city or town setting its own rates. The state’s average effective property tax rate ranges from 1.30% to 1.40%, which is comparatively high nationwide. Property values are typically assessed at their market value, and localities are mandated to conduct full revaluations every nine years. Property tax bills are calculated by multiplying the assessed value by the local tax rate.

Rhode Island’s motor vehicle excise tax has been completely phased out, effective Fiscal Year 2024. A real estate transfer tax is applied at closing, typically paid by the seller. This tax is $4.60 per $1,000 of the selling price, with a higher rate for portions exceeding $800,000. The state also imposes a gasoline tax of 38.12 cents per gallon.

Influences on Cost of Living

Rhode Island’s elevated cost of living is influenced by several factors. Its small geographical size and desirable coastal location significantly impact housing demand and prices. Proximity to major metropolitan areas like Boston also drives up costs, attracting individuals seeking a suburban or coastal lifestyle within commuting distance.

Limited land availability and high population density create a supply-and-demand imbalance in the housing market. This scarcity of buildable land and existing inventory often results in higher purchase prices and rental rates. The demand for housing often outstrips the available supply, contributing to competitive market conditions.

The local economy and prevailing wage levels also play a part in affordability. While the median household income in Rhode Island is around $74,489, the high cost of goods and services means a comfortable lifestyle may require a higher income. Industries such as technology, finance, and healthcare tend to offer wages that better align with the state’s cost structure.

Energy costs are another significant influencer. The Northeast region generally experiences higher utility expenses. Rhode Island’s reliance on specific energy sources and existing infrastructure leads to elevated prices for electricity and natural gas, contributing to higher monthly utility bills.