Work in Rhode Island, Live in Massachusetts: Taxes, Credits and Payroll

Reciprocity

Do Rhode Island and Massachusetts have a tax reciprocity agreement?

Neither state's rules give a Massachusetts resident a way to skip Rhode Island tax on Rhode Island work. Rhode Island's employer withholding regulation, 280-RICR-20-55-10, says a Rhode Island employer must withhold Rhode Island income tax when the wages are subject to federal withholding and any part of the wages were for services performed in Rhode Island. The regulation has no carve-out for employees who live in another state.

Massachusetts deals with the overlap from its side. Its withholding regulation, 830 CMR 62B.2.1, contains a multiple withholding clause for residents whose employers must withhold another state's income tax. Massachusetts law then gives residents a credit for taxes due any other state on income that Massachusetts also taxes. The result: Rhode Island taxes the paycheck first, Massachusetts taxes it again, and the credit removes the overlap.

To compare this with states that do have agreements, see our list of state reciprocity agreements.

Returns

Which returns do you file with a Rhode Island job and a Massachusetts home?

Two. Rhode Island's regulations name the RI-1040NR as the Rhode Island nonresident personal income tax return, and that is where your Rhode Island wages go. In Massachusetts, the nonresident regulation assigns Form 1 to residents and Form 1-NR/PY to nonresidents and part-year residents. A full-year Massachusetts resident files Form 1.

Massachusetts treats you as a resident if you are domiciled there, or if you keep a permanent place of abode in Massachusetts and spend more than 183 days of the tax year in the state.

Finish the Rhode Island return first. The Massachusetts credit depends on the Rhode Island tax figure, so the Form 1 credit cannot be completed until the RI-1040NR is final. Keep a copy of the Rhode Island return with your Massachusetts records; the Department of Revenue lists it among the documents taxpayers should be prepared to submit.

The credit

How does Massachusetts credit the tax you pay Rhode Island?

The credit comes from G.L. c. 62, section 6(a). The Department of Revenue describes it as a credit allowed to a resident for taxes due any other state on account of any item of Massachusetts gross income. Your Rhode Island wages are part of that income. Nonresidents cannot claim it, because Massachusetts taxes them only on Massachusetts source income.

The credit has a ceiling. In its Rhode Island directive, the Department explains that the computation compares the Massachusetts income tax on income reported to Rhode Island with the actual tax plus RISDI paid to Rhode Island, and the credit is limited to the smaller of the two amounts. That leaves two outcomes:

• If the Rhode Island amount is lower, you pay Massachusetts the difference on those wages.
• If the Rhode Island amount is higher, the credit stops at the Massachusetts tax on that income.

Very high earners should also know that Massachusetts adds a 4% surtax on the portion of taxable income above an inflation-adjusted threshold, which is $1,083,150 for the 2025 tax year. Check the Department of Revenue for the current rate and threshold before you estimate the credit.

On the 2025 Massachusetts Form 1 the credit goes on line 30, and Massachusetts asks you to complete and enclose Schedule OJC, Income Tax Due to Other Jurisdictions. You must have filed a return and paid the tax in the other state, and the credit does not apply to city or local taxes.

RI TDI

Does Rhode Island TDI count toward the Massachusetts credit?

Yes, and it is easy to miss. Rhode Island's Temporary Disability Insurance program requires employees working in Rhode Island to pay amounts measured by their wages into a state fund. Massachusetts once refused to treat those payments as an income tax. Revised Directive 12-1 revoked that earlier letter ruling and answered the question directly: provided the taxpayer is a Massachusetts resident, the payments are eligible for the credit.

The directive tells you how to use it. The RISDI should be included as part of the total tax paid to Rhode Island when you work out the credit. For support, the Department may ask for a copy of the Rhode Island W-2 showing the RISDI amount in Box 14, plus a copy of the Rhode Island return.

The directive also applies to all open tax periods. If you filed an earlier Form 1 without counting TDI and the year is still open, an abatement claim may recover the difference. Check Box 14 of your W-2 each January so the amount makes it into this year's credit.

Withholding

How should your employer split withholding between the two states?

Rhode Island comes first. Its regulation requires employers to have employees complete the RI-W4, and it requires Rhode Island withholding on wages for services performed in Rhode Island. Massachusetts then adjusts. Under the multiple withholding clause of 830 CMR 62B.2.1, when an employer must withhold another state's income tax from a Massachusetts resident, it withholds the Massachusetts amount less the amount the other state requires.

Directive 91-4 sets out the steps. Payroll figures the Massachusetts withholding the pay period would normally need, subtracts the withholding required by the other state, and withholds and pays the difference to Massachusetts. If the other state's amount equals or exceeds the regular Massachusetts amount, no Massachusetts tax should be withheld. The Massachusetts figure starts from the exemptions you claim on Form M-4.

A Rhode Island company with no Massachusetts office may not withhold Massachusetts tax at all. The regulation lets employers not maintaining an office or transacting business in Massachusetts withhold it as a convenience for Massachusetts residents who ask. If yours says no, set money aside for the Form 1 balance.

At year end your W-2 can list both states. Directive 91-4 says the Massachusetts tax actually withheld during the calendar year should appear on your annual Form W-2, next to the Rhode Island line. Two state lines on one W-2 describe one set of wages, not two. Enter the job once in your software and let the state lines split, or Form 1 may count the same pay twice.

If your Rhode Island employer does not withhold Massachusetts tax, Massachusetts expects estimated payments from anyone who expects to pay more than $400 of Massachusetts income tax on income not covered by Massachusetts withholding.

Worked example: how RI TDI changes the Massachusetts credit

All dollar amounts are hypothetical, chosen to show the smaller-of comparison in Revised Directive 12-1. No tax rates are applied.

Hybrid work

What if you work some days from home in Massachusetts?

Rhode Island's withholding test turns on where the work is done: withholding applies when any part of the wages were for services performed in Rhode Island. A hybrid schedule usually shrinks the Rhode Island share of your pay and raises the share taxed only by Massachusetts. If your employer treats every day as a Rhode Island day, ask the Rhode Island Division of Taxation how it sources your arrangement before you accept the withholding.

Your combined tax often moves less than the split does. Massachusetts taxes your home days directly and credits the Rhode Island tax on office days, so the main changes are which state receives the money, how much each payroll withholds, and the size of the credit. Keep a calendar of office days and home days. Payroll needs the ratio, and you need it to report the right Rhode Island wages on the RI-1040NR.

You may read about the Massachusetts pandemic telecommuting rule, 830 CMR 62.5A.3. It dealt with nonresident employees working remotely for Massachusetts businesses, not residents working for Rhode Island ones, and it covered services from March 10, 2020 through 90 days after the Massachusetts COVID-19 state of emergency ended.

Moving

What happens if you move between Massachusetts and Rhode Island mid-year?

A move across the state line splits the year in two, and each state claims its own slice. Massachusetts assigns Form 1-NR/PY to part-year residents. Rhode Island's rules also recognize partial-year residents and point them to the partial-year resident form, with special attention to proper allocations. Split income by the move date so each state taxes the right period.

If you move into Rhode Island and keep a Massachusetts job, the credit changes sides. Rhode Island's credit rule gives a resident a credit against Rhode Island tax for net income taxes imposed by other states, and the credit cannot exceed the share of Rhode Island tax that matches the income from those states. Give payroll new withholding certificates as soon as your address changes, so each state's withholding follows your new residence.

Payroll errors

What if the wrong state's tax comes out of your pay?

• No Rhode Island tax withheld: Rhode Island tax is still due on your Rhode Island work. Rhode Island requires estimated payments when the tax can reasonably be expected to be $250 or more in excess of allowable credits, so ask payroll to start Rhode Island withholding and hand in an RI-W4.
• Full Massachusetts withholding on top of Rhode Island withholding: The multiple withholding clause lets payroll cut the Massachusetts amount by the Rhode Island amount. Ask for the adjustment; anything over-withheld comes back when you file Form 1.
• Rhode Island tax on days worked at home: Report the correct Rhode Island wages on the RI-1040NR so the extra withholding is settled on that return.

This is general information, not tax advice.