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Uber rides now taxed in Rhode Island


 There's no longer any doubt about it: Rhode Island sales tax applies to Lyft, Uber.

Charges for the transportation services provided by Uber, Lyft, and similar transportation network companies (TNC) are subject to Rhode Island sales tax (7%) as of July 1, 2016.

There’s been a bit of an ongoing battle in Rhode Island between the state and Uber and Lyft. Back in early 2015, the state accused the companies of not remitting sales tax on their intrastate services (intrastate transportation services have been taxable in Rhode Island since 2012), and in March 2015, the Rhode Island Division of Taxation confirmed that neither Lyft not Uber had applied for or obtained a sales tax license. The two companies had different responses to this accusation: Uber acknowledged it had been “holding an undisclosed amount of Rhode Island sales tax collected from local rides,” while Lyft said that since the law didn’t require it to collect the tax, it didn’t. Uber eventually remitted an undisclosed amount of back sales tax to the Division of Taxation (read more on this).

Now a new law leaves little room for uncertainty or doubt. Transportation network companies, defined as “an entity that uses a digital network to connect transportation network company riders to transportation network operators who provide prearranged rides,” must do all of the following:

  • File a business application and registration form with the Division of Taxation
  • Obtain a permit from the Division of Taxation to make sales at retail
  • Charge, collect and remit sales and use tax to the Division of Taxation

Additional information.

These companies are also subject to the following tiered permit fees under HB 8044:

  • Companies with fewer than 50 drivers pay $5,000 annually
  • Companies with between 50 and 200 drivers pay $10,000 annually
  • Companies with more than 200 drivers pay $30,000 annually

Different state, different policy

It’s interesting to note differences in state policies. For example, South Dakota allows localities to impose additional requirements than the state on transportation network companies, while Rhode Island specifically does not. Negotiating these nuances creates compliance challenges for businesses, such as Uber and Lyft, operating in multiple states.

Sales tax software-as-a-service (SaaS) simplifies sales and use tax compliances in all states. Learn more.


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.