From tax year 2025, Rhode Island lets you subtract up to $50,000 of pension and 401(k) income a year, per person, not IRA income, if you're at full retirement age and under the income limit. Social Security follows the same test. Military retirement pay is fully exempt. Everything else is taxed.
The pension and annuity modification
Rhode Island starts from your federal AGI and lets qualifying retirees subtract pension and annuity income that was taxed on the federal return. For tax year 2025, the return filed in 2026:
| How much | Up to $50,000 per person; up to $100,000 on a joint return |
| Qualifies | Private and government pensions, 401(k), 403(b) and 457(b) plans, annuities, profit-sharing plans (the income on line 5b of your federal 1040) |
| Does not qualify | IRAs of every kind: traditional, Roth, SEP and SIMPLE. Also corrective distributions and completed rollovers |
| Who | You have reached your Social Security full retirement age, and your federal AGI is under the limit below |
Source: Division of Taxation, Retirement Income Guide (PUB 2026-01) (opens in new tab) and ADV 2025-22 (opens in new tab). Checked October 2026.
A worked example: a single filer at full retirement age, with federal AGI under the limit and $60,000 of pension income, subtracts $50,000. The other $10,000 is taxed. If the same $60,000 had come out of a traditional IRA, none of it would be subtracted.
IRAs don't count. Not traditional, not Roth, not SEP, not SIMPLE.
This is the line that catches people. A 401(k) distribution qualifies; an IRA distribution does not. If you are weighing a rollover from a 401(k) to an IRA, ask a CPA how Rhode Island would treat the later withdrawals before you move anything.
The age and income test
Two conditions, both required. You must have reached your Social Security full retirement age, which Social Security sets from the year you were born. And your federal AGI must be under the limit for your filing status:
| Filing status | Federal AGI must be under (TY2025) |
|---|---|
| Single, head of household, married filing separately | $107,000 |
| Married filing jointly, qualifying surviving spouse | $133,750 |
Source: ADV 2025-22 (opens in new tab) and the 2025 RI-1040 instructions (opens in new tab). The Retirement Income Guide prints the joint figure as $133,500; the advisory and the instructions both say $133,750, which is what we use. The tax year 2026 limits had not been published when we checked.
Over the limit, the modification is not available that year. In the years your AGI sits close to the line, timing matters: a Roth conversion, a capital gain or an IRA withdrawal on one side of December 31 or the other can decide whether you qualify. That is planning, not preparation, and it is the kind of thing worth raising with a CPA in October rather than April.
Social Security, and what changes in 2027
The Social Security modification uses the same two tests. If you pass them, Rhode Island subtracts the part of your benefits that was taxable on your federal return. If none of your benefits were federally taxable, there is nothing to subtract.
The 2026 legislative session changed this: from tax year 2027, the age requirement is removed for the Social Security modification. The income limit stays. Someone who starts benefits before full retirement age and is under the limit will be able to subtract the federally taxable part from the 2027 return on.
The repeal is written for Social Security. Nothing we verified extends it to the pension modification, so plan on the age test still applying to pension and 401(k) income until the Division of Taxation says otherwise. Source: 2026 Summary of Legislative Changes (opens in new tab).
Military retirement pay
Fully exempt since tax year 2023, with no age or income test. A surviving spouse receiving the benefit qualifies too. It is subtracted on its own, not counted a second time under the pension modification (R.I. Gen. Laws § 44-30-12(c)(11); Retirement Income Guide (opens in new tab), section 2).
What the rest is taxed at
Whatever is left is taxed at Rhode Island's three rates. For tax year 2025: 3.75% on taxable income up to $79,900, 4.75% up to $181,650, and 5.99% above that. The brackets move every year (ADV 2025-22 (opens in new tab) has the current figures).
Rhode Island does not allow federal itemized deductions. Every filer takes the Rhode Island standard deduction instead: $10,900 single, $21,800 married filing jointly for tax year 2025. If you itemize federally, large medical bills being a common reason in retirement, none of it carries to the Rhode Island return.
Splitting the year, or moving away
You are a Rhode Island resident for tax purposes if you are domiciled here, or if you keep a permanent place of abode here and spend more than 183 days in the state. Keeping the house and spending most of the year in it can make you a resident even after you declare another state home. Changing domicile takes three things: intent to abandon the old one, intent to acquire the new one, and actually being there (RI-1040 instructions (opens in new tab), p. I-1). A move year is one of the situations where a CPA reliably earns the fee.
The estate tax most retirees forget
Rhode Island is one of the few states that still has an estate tax. The threshold is $1,802,431 for deaths in 2025 and $1,838,056 for deaths in 2026, and it is indexed every January (ADV 2026-02 (opens in new tab)). A paid-off house and a retirement account can get closer to that than people expect. If you are anywhere near it, plan with a CPA and an estate attorney together.
When to hire a CPA for a retirement return
The situations where a Rhode Island CPA earns the fee:
- Your AGI is near the $107,000 or $133,750 line, and you want to know which withdrawals to take this year and which to defer.
- Most of your savings sit in an IRA, or you are thinking about rolling a 401(k) into one.
- A joint return where one spouse has reached full retirement age and the other hasn't.
- You are planning Roth conversions and want the Rhode Island side modeled, not just the federal side.
- You split the year between Rhode Island and another state, or moved during it.
- Your estate is within reach of the estate tax threshold.
- Rental property, a consulting business, or inherited IRA distributions on top of retirement income.
Tell us what you need and get matched with a Rhode Island CPA, or browse CPAs by city. Ask any candidate about the IRA exclusion; a CPA who works with Rhode Island retirees will know it without looking it up. See what a Rhode Island CPA charges and how to choose one.
When you probably don't need one
Social Security plus one pension, comfortably under the income limit, is a return software handles well. If you qualify, the IRS's VITA and Tax Counseling for the Elderly programs prepare returns at no cost.
If you would still rather a licensed person file it, you may find local firms reluctant to take a one-off simple return in season. A remote filing service will, for a flat fee agreed up front. The preparer is licensed but not necessarily a CPA, and not necessarily in Rhode Island; for a simple return, that trade is usually fine. For anything in the list above, it isn't — use a local CPA.
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Frequently asked questions
Is retirement income tax-free in Rhode Island?
No, and that phrase is how people get surprised. From tax year 2025, Rhode Island lets you subtract up to $50,000 of pension and 401(k) income, not IRA income, if you have reached your Social Security full retirement age and your federal AGI is under the income limit. Everything outside that is taxed at the regular rates.
Does Rhode Island tax Social Security benefits?
Not if you have reached full retirement age and your federal AGI is under the limit: $107,000 for single, head of household and married filing separately, or $133,750 for married filing jointly, for tax year 2025. Then the federally taxable part of your benefits is subtracted. From tax year 2027 the age requirement is removed; the income limit stays.
Are IRA withdrawals taxed in Rhode Island?
Whatever part is federally taxable gets no Rhode Island break. IRAs of every kind (traditional, Roth, SEP and SIMPLE) are excluded from the pension modification. Distributions from a 401(k), 403(b) or 457(b) plan qualify; distributions from an IRA do not.
How does the modification work on a joint return?
It is up to $50,000 per person, so up to $100,000 on a joint return. The age and income tests are the same ones that apply to the Social Security modification, with the married-filing-jointly limit of $133,750 for tax year 2025.
Is my military pension taxed in Rhode Island?
No. Military retirement pay has been fully exempt since tax year 2023, with no age or income test, and a surviving spouse qualifies too. It is subtracted on its own and is not counted a second time under the pension modification.
What was the limit before 2025?
The pension modification was $15,000 for tax years 2017 through 2022 and $20,000 for 2023 and 2024. It rose to $50,000 for tax year 2025, the return filed in 2026. If you have seen $15,000 or $20,000 quoted, it was written for an earlier year.
Sources
- RI Division of Taxation, Retirement Income Guide, PUB 2026-01 (opens in new tab) (February 2026, tax year 2025)
- ADV 2025-22, Inflation Adjustments (opens in new tab) (income limits, brackets, standard deduction)
- ADV 2025-01, Tax Changes (opens in new tab) (the increase to $50,000)
- 2026 Summary of Legislative Changes (opens in new tab) (Social Security age-test repeal from tax year 2027)
- 2025 RI-1040 instructions (opens in new tab) (residency, income limits, no itemizing)
- ADV 2026-02 (opens in new tab) (estate tax threshold)
General information, not tax advice. Figures were checked against the sources above in October 2026 and change every year; confirm with the Division of Taxation or a licensed CPA before acting on them.
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