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Rhode Island's Experimental Wine and Spirits Exemption

  • Jul 8, 2013 | Gail Cole

 Rhode Island tries sales tax exemption for liquor, wine.

Update 4.20.2015: The temporary sales tax exemption for wine and spirits, initially scheduled to terminate on March 31, 2015, will now end on June 30, 2015.

The 2014 Rhode Island budget has been approved. It will not increase taxes or fees, but it does allow a sales tax exemption for creative works sold anywhere in the state. It also institutes a 16-month trial sales tax exemption for sales of wine and spirits.

The exemption begins on December 1 of this year and is scheduled to terminate on March 31, 2015. During that time, the existing "mandatory 6 percent-over-wholesale markup" will be eliminated, so retailers will be able to set their own prices.

Rhode Island v. Massachusetts

The exemption is intended to help Rhode Island be more competitive with neighboring Massachusetts, where sales of wine and spirits have been tax free since 2011.

Beer drinkers are out of luck--the trial exemption does not apply to sales of beer. This is not a reflection on the liquor consumption of Rhode Island lawmakers. Rather, it is because the competitor, Massachusetts, collects a 5-cent deposit on each and every can or bottle of beer sold. Rhode Island does not, giving it a competitive edge.

Excise taxes on the rise

Meanwhile, numerous alcoholic beverages are subject to a temporary increase in excise taxes. Between July 1, 2013, and March 31, 2015, the following changes are in effect:

Beverage Old tax rate New tax rate
Still wines $0.60 $1.40
Whiskey, other distilled spirits $3.75 $5.40
Malt beverages, including beer $3.00 $3.30

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.