SALT Report 1692 – The Rhode Island Division of Taxation issued a notice for all retailers regarding the taxability of clothing and footwear. Effective October 1, 2012 Rhode Island General Laws §§ 44-18-18 and 44-18-20 will impose sales tax on the retail sale of clothing and footwear with a sales price of more than $250 per item.
Therefore, Rhode Island’s 7% sales and use tax should be applied as follows:
- A consumer pays $275 for a suit. The first $250 is exempt; the tax shall apply only to $25. Therefore, the retailer shall collect and remit $1.75 in tax in this example.
- A consumer pays $300 for 10 shirts, each priced at $30. No tax is due as items of clothing with a sales price of $250 or less will remain exempt.
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