Is Rhode Island Really Cheap to Live In?

Rhode Island, often called the “Ocean State,” has a cost of living approximately 13% higher than the national average. This overview dissects the financial components contributing to the overall cost of living for those considering residency.

Housing Costs in Rhode Island

Housing represents a significant portion of expenses in Rhode Island, with both purchase prices and rental rates reflecting a competitive market. The median single-family home price reached $520,000 in June 2025. Condominiums offer a more affordable option, with a median price of $352,500 in June 2024, while multi-family homes saw a median price of $541,000 in 2024.

Rental costs across Rhode Island are also above the national average, with the average rent for all property types being $2,250 per month as of August 2025. For specific apartment sizes, a studio averages $1,583 per month, a one-bedroom unit $1,821, and a two-bedroom unit $2,231 monthly. In urban centers like Providence, average rent is $2,047 per month, with a two-bedroom apartment costing around $2,589. Housing costs are influenced by factors such as limited inventory, elevated demand from out-of-state buyers, and rising costs of new construction and renovations. Proximity to major employment hubs, school district reputations, and seasonal demand in coastal areas further contribute to price variations.

Everyday Living Expenses

Beyond housing, daily expenditures contribute to the overall cost of living. Utility costs are notably higher than the national average, placing Rhode Island among the most expensive for these services. For a family of three in a single-family home, the average monthly utility bill is approximately $790.88 in 2025, largely driven by electricity costs averaging $318.62 per month. Natural gas averages around $95 monthly, water about $32, and internet services $20, though combined internet and cable TV expenses average $113.66. The state’s climate, with cold winters and warm summers, necessitates higher energy consumption, and older housing infrastructure can also contribute to elevated utility bills.

Grocery expenses in Rhode Island are generally comparable to national averages, though some reports indicate they can be about 10% higher. An individual’s average monthly grocery bill is around $390. Dining out also adds to food costs, with a mid-range restaurant dinner for two costing about $75. Transportation expenses, including gasoline prices, generally align with national averages. However, car insurance premiums in Rhode Island are higher, with full coverage averaging around $2,435 per year and minimum coverage about $916 annually.

Taxation and Overall Financial Picture

Rhode Island’s tax structure significantly impacts residents’ financial obligations. Property taxes are a notable expense, with the average homeowner paying approximately $4,776 annually. The average residential property tax rate across the state is about 14.43 per $1,000 of assessed value. Property tax rates vary considerably by municipality, as local governments set their own rates based on assessed values.

The state employs a progressive income tax system with three brackets. For the 2024 tax year, rates range from 3.75% for incomes up to $77,450, increasing to 4.75% for incomes between $77,450 and $176,050. Any income exceeding $176,050 is taxed at the highest rate of 5.99%.

Rhode Island imposes a uniform state sales tax rate of 7% on most goods and services, with no additional local sales taxes. Exemptions from sales tax include non-prepared food, clothing, and prescription drugs. The state’s motor vehicle excise tax was phased out for Fiscal Year 2024.

Hotel and motel rentals are subject to an additional 6% tax, bringing the total tax on lodging to 13%. An estate tax also applies to gross estates valued at $1,774,583 or more for deaths occurring after January 1, 2024.

Understanding Cost of Living Variations

Evaluating the affordability of living in Rhode Island requires considering individual circumstances, lifestyle choices, and specific locations within the state. The perception of whether Rhode Island is “cheap” is subjective and depends on one’s income and spending habits. While the state’s overall cost of living is higher than the national average, income levels also provide context.

The median household income in Rhode Island was $84,972 in 2023, with the average household income reported at $112,642. For a comfortable lifestyle, estimates suggest an annual income between $85,000 and $100,000 may be more realistic, especially when factoring in the elevated costs of healthcare and taxes. Costs can vary significantly even within Rhode Island; urban areas, such as Providence, generally exhibit higher living expenses compared to other regions. This internal variability means that careful consideration of a specific town or city’s economic profile is beneficial when assessing overall affordability.