Rhode Island Social Security Tax Exemption Rules

While the federal government may tax a portion of your Social Security benefits, Rhode Island provides a state-level exemption that can reduce or eliminate this tax for qualifying retirees. This tax relief is not automatic and depends on specific age and income criteria established under state law. Understanding these rules is the first step for Rhode Island residents to determine if they can exclude their Social Security income from their state tax return.

Eligibility Requirements for the Exemption

To qualify for Rhode Island’s Social Security tax exemption, a taxpayer must meet two conditions for age and income. The first is that the taxpayer must have reached their full retirement age as defined by the Social Security Administration (SSA). This age varies depending on an individual’s birth year, ranging from 66 to 67 for those born in 1943 or later.

The second condition is an income test based on your federal Adjusted Gross Income (AGI). For the most recent tax year, the state has set specific AGI thresholds based on filing status. For those filing as single, head of household, or married filing separately, the federal AGI must be below $104,200. For married individuals filing a joint tax return, the combined federal AGI must be less than $130,250 to qualify.

Calculating the Taxable Amount

Once you confirm your eligibility, you can calculate the excludable amount. Qualifying taxpayers can subtract the federally taxable portion of their Social Security benefits from their state income, meaning you will not pay any Rhode Island tax on that income.

Consider a married couple who have both reached full retirement age. Their federal AGI is $120,000, and they received $50,000 in Social Security benefits, with $42,500 being federally taxable. Because their AGI is below the $130,250 threshold for joint filers, they are eligible for the Rhode Island exemption. They can subtract the full $42,500 of federally taxable Social Security benefits from their Rhode Island income.

The focus is on the portion of benefits the federal government deems taxable, not the gross amount received. If none of your Social Security is taxable at the federal level, there is no need to claim the Rhode Island exemption, as there is no federally taxed amount to subtract.

Claiming the Exemption on Your Tax Return

To claim the Social Security tax exemption, you must report it on your annual Rhode Island income tax return, Form RI-1040. The exemption is not applied automatically and must be claimed as a modification to your income.

The subtraction is reported on Schedule M, titled “Modifications to Federal AGI,” on the line for the “Social Security and Railroad Retirement modification.” Here, you will enter the amount of your federally taxable Social Security benefits that you calculated. This figure should match the taxable amount reported on your federal Form 1040. The total from Schedule M then transfers to the main Form RI-1040, reducing your Rhode Island adjusted gross income.