By PBN Staff
By PBN Staff
WASHINGTON – Rhode Island finds itself in the middle of the national pack for the top marginal tax rates for sole proprietorships and S-corporations, according to the latest “Monday Maps” published by the Tax Foundation.
The Ocean State was ranked No. 21 in both cases (with No. 1 being the highest marginal rate) based on statutes in place in the 50 states and Washington, D.C., as of Jan. 1, 2013, that affect more than 30 million pass-through businesses in the United States. The rates do not reflect the effective tax rate for the state, but rather are the rate for “the next dollar of income earned by pass-through businesses in each state’s highest tax bracket,” said the Tax Foundation.
The rates are the sum of federal, state and local income taxes, as well as self-employment taxes, and reflect the limits on itemized deductions.
The top marginal rate for sole proprietorships in Rhode Island was reported as 47.4 percent, which compares with 47 percent in Massachusetts (No. 26 on the list) and 47.8 percent in Connecticut (No. 19). The highest marginal rate in the nation was recorded by California, at 51.8 percent, while the lowest marginal rate – 42.6 percent – was recorded by eight states, including Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
The Tax Foundation calculated the top marginal rate for S-corporations in Rhode Island at the beginning of 2013 was 44.4 percent, as compared with No. 26, Massachusetts, at 44 percent, and No. 18, Connecticut, at 44.8 percent. The highest rate was once again recorded in California, at 48.8 percent, while the same eight states – Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming – tied for the lowest top marginal rate, at 39.6 percent.
For the full report from the Tax Foundation, click HERE.