If you're a resident of Rhode Island and leave behind more than $1,595,156 (for deaths occurring in 2021), your estate might have to pay Rhode Island estate tax. The Rhode Island estate tax is different from the federal estate tax, which is imposed on estates worth more than $11.7 million (for deaths in 2021). So even if your estate isn't large enough to owe federal estate tax, it might still owe Rhode Island estate tax.
But it's not just state residents who might owe Rhode Island estate tax. If you're a nonresident but own real estate or other tangible assets (a boat or plane, for example) located in Rhode Island, your estate might also need to file a Rhode Island estate tax return.
If the "gross estate" of a Rhode Island resident has a value of more than $1.5 million, the personal representative or executor of the estate must file the Rhode Island estate tax return, Form RI-100A.
Your gross estate will include just about all of the property you own at your death:
Co-owned property. If you own assets with someone else, generally only your share will be included in your estate. In other words, if you and your spouse own your house, half of its value would be included in your estate.
Nonprobate assets. Notably, your gross estate also includes non-probate assets. For example, the property you hold in a revocable living trust avoids probate, but it does not avoid estate taxes, and is counted in your gross estate.
Portability. The federal estate tax regime allows a surviving spouse to use the deceased spouse's unused portion of the exemption—a feature called "portability." However, Rhode Island's estate tax does not offer portability between spouses; each spouse has a separate exemption amount of $1,595,156.
If the gross estate of a Rhode Island resident has a value of $1.5 million or less, the personal representative or executor of the estate must file Form RI-100, which explains that no estate tax is due.
Even if a Rhode Island estate tax return must be filed, it doesn't necessarily mean that the estate will owe estate tax. Your estate might be able to take certain deductions that lower the value of your estate below $1,595,156, in which case no estate tax will be due. These deductions include:
If your estate owes estate tax, how much will it actually owe? In Rhode Island, the amount of tax owed depends on the size of the estate. Rhode Island relies on a complicated system of credits to determine the exact tax owed, but by way of example, a taxable estate of $2 million will owe $30,085 in estate tax (effectively a rate of 1.5%, or 7.16% if you're calculating the tax on the amount that exceeds the exemption), while a taxable estate of $10 million will owe $998,085 (effectively a rate of 9.98%, or 11.85% if you're calculating the tax on the amount that exceeds the exemption). (Compare these rates to the current federal estate tax rate of 40% on the portion of the estate that exceeds the federal exemption.)
If a return is required, it's due nine months after the date of death. When the payment of the tax causes undue hardship, requests can be made for extending the deadline or for paying in installments by contacting the Rhode Island Estate Tax Administrator.
Your executor will likely have to hire professional help (an experienced lawyer or CPA) to prepare the Rhode Island estate tax return. The estate's funds can be used to pay for professional fees. Estate tax forms and instructions are available at the Rhode Island Department of Revenue.