Updated October 4, 2026. Quick answer: It depends on the account. Rhode Island taxes IRA withdrawals in full: the Division’s guide says income from “a traditional IRA, Roth IRA, SEP-IRA, or any other type of IRA” does not qualify for its pension modification. A 401(k) distribution can qualify for a modification of up to $50,000 per person in 2025 if the age and income tests are met: the guide’s first test is federal AGI that “includes taxable income from pensions, 401(k) plans, annuities, and/or other such sources”.
More state retirement-income schedules, line by line: Rhode Island Schedule M.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Rhode Island tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Rhode Island tax 403(b) and 457(b) withdrawals.
What Rhode Island does with 401(k) and IRA withdrawals
The instructions limit the modification to income “received by the taxpayer born on or before March 1, 1959”, and the statute says the modification “shall be allowed for up to fifty thousand dollars ($50,000)”. The Division’s guide prints $133,500 for a joint return where the instructions print $133,750, so check the Division’s current figure before relying on a joint-return limit near that line.
| Item | What the documents say |
|---|---|
| IRA withdrawals | Taxed in full: no IRA income qualifies for the pension and annuity modification |
| 401(k) distributions | Up to $50,000 per person modified out for 2025, if the age and income tests are met |
| Age test | Born on or before March 1, 1959 and at full Social Security retirement age |
| Income test | Federal AGI of $107,000 or less (single) or $133,750 or less (married filing jointly) per the RI-1040 instructions |
| State rates | 3.75%, 4.75% and 5.99% (2025) |
| Source | Rhode Island Division of Taxation, 2025 RI-1040 instructions and Retirement Income Guide; R.I. Gen. Laws 44-30-12 |
A $40,000 withdrawal
For a qualifying single filer under the income limit, a $40,000 401(k) distribution is below the $50,000 modification and can be fully exempt. The same $40,000 taken from an IRA is fully included in Rhode Island income.
What changes in 2026
The documents read print no 2026 rate or modification change.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Rhode Island taxes pensions, how Rhode Island taxes retirement income, whether Rhode Island taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- 2025 Instructions for Filing RI-1040 (full-year residents), incl. RI Schedule M line 1t and tax computation worksheet: view the document
- Rhode Island Retirement Income Tax Guide: Modifications for Retirement Income (Tax Year 2025): https://tax.ri.gov/sites/g/files/xkgbur541/files/2026-02/PUB_2026-01_Retirement_Income_Guide.pdf
- R.I. Gen. Laws 44-30-12 Rhode Island income of a resident individual (modifications): https://webserver.rilegislature.gov/Statutes/TITLE44/44-30/44-II/44-30-12.htm
- 2025 RI Schedule M, RI Modifications to Federal AGI: view the document
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.