Rhode Island has recently made important changes to its Social Security tax policy, with the goal of easing the financial burden on retirees.

These adjustments are particularly relevant for retirees who depend on Social Security benefits as their primary source of income. For many years, Rhode Island has taxed Social Security benefits, but the new changes could mean significant savings for some residents. As a retiree in Rhode Island, it’s important to understand these modifications and how they might impact your retirement income in the future.

Current Taxation of Social Security Benefits in Rhode Island

In Rhode Island, Social Security benefits are taxed for retirees with income above a certain threshold. As of 2025, the state taxes Social Security benefits for individuals with a federal adjusted gross income (AGI) over $25,000, and for married couples filing jointly, the threshold is $32,000. This means that retirees with moderate incomes may still find themselves paying state taxes on their Social Security benefits, even though they are exempt from federal taxation. However, these thresholds make it so that retirees with lower incomes are generally not subject to state income taxes on their benefits.

While the law has helped generate state revenue, it has also been a burden for many retirees who rely heavily on Social Security benefits to cover their living expenses. As such, the issue of taxing Social Security benefits has been a topic of concern for lawmakers in Rhode Island for several years.

Proposed Changes to Social Security Taxation

In 2023, Rhode Island lawmakers introduced a new bill aimed at providing financial relief to retirees. This bill proposed eliminating the state income tax on Social Security benefits for all residents, regardless of their income. The goal was to make Rhode Island a more attractive state for retirees and to ease the financial pressure on those who are living on fixed incomes.

Unfortunately, the bill did not pass. Despite this setback, discussions about the future of Social Security taxation are likely to continue. Many lawmakers in Rhode Island are advocating for further changes to help retirees. Even though the bill was not approved this time, it may be reintroduced in future legislative sessions, reflecting the ongoing concern about retirees’ financial well-being in the state.

Recent Developments: Cost-of-Living Adjustment (COLA)

In addition to the proposed tax changes, retirees in Rhode Island will benefit from a 2.5% cost-of-living adjustment (COLA) for Social Security benefits in 2025. This increase, which will raise the average monthly Social Security retirement benefit by about $47 (bringing it to $1,872), is intended to help recipients keep up with inflation. However, it’s important to note that this COLA increase could be partially offset by an expected rise in Medicare Part B premiums, which are projected to increase to $185 per month.

While the COLA adjustment is positive news for retirees, it may not fully cover the rising costs of healthcare and living expenses, which continue to put pressure on fixed-income retirees.

What Retirees Need to Know

While the recent bill to eliminate the Social Security tax did not pass, retirees should stay informed about future legislative changes. The possibility of eliminating the tax on Social Security benefits could be revisited in upcoming legislative sessions. Retirees are advised to keep an eye on state tax policies and consult with financial planners to ensure they’re prepared for any changes.

Rhode Island’s recent attempts to ease the financial burden on retirees are steps in the right direction, but the state’s tax policy on Social Security benefits remains in effect for now. Although the bill to eliminate the tax did not pass, lawmakers are still focused on addressing retirees’ concerns. In the meantime, retirees should continue to plan carefully, stay informed about potential changes, and seek advice from financial experts to ensure they make the most of their retirement income.