Rhode Island's $400 Minimum Tax for LLCs and S Corps: Who Owes It, the April 15 Single-Member Date, and Whether the PTE Election Still Pays at a 90% Credit

2026-10-13 · RKube Services

Rhode Island's $400 minimum tax for LLCs and S corps: who owes it, the April 15 single-member date, and whether the PTE election still pays.

Every Rhode Island LLC and S corporation owes the state at least $400 a year, even if it made nothing and even if it only existed for a few weeks. Owners in Providence and Warwick usually learn this the hard way, when a notice for several years of unpaid annual charges arrives right as they try to close the business or sell a building.

This guide covers who owes the $400, which form each kind of LLC files and when, the penalties for missing it, and the newer question for profitable pass-throughs: since the owner credit for the elective pass-through entity (PTE) tax dropped to 90% for 2025, is the election still worth making?

The Rhode Island (RI) annual charge by entity type

The Division of Taxation's Notice 2025-01 lays out the rules, and the 2025 form instructions add the details.

Three rules catch most owners:

• It's not prorated. The notice says the requirement applies for any year the business exists, "whether a full year, or partial year," including the year it's formed and the year it dissolves. An LLC formed on December 1 owes the full $400 for that year.
• Single-member LLCs aren't exempt. A disregarded LLC is invisible on the owner's federal return, but Rhode Island still requires the RI-1065 and the $400.
• No income doesn't mean no return. The charge is owed whether the business earned money or not.

The $400 has been the rate for tax years beginning on or after January 1, 2017. It was $450 for 2016 and $500 for 2004 through 2015.

The single-member LLC date: April 15 or March 15?

The 2025 RI-1065 instructions set two due dates. For most filers, RI-1065 is due on the 15th day of the third month after year-end. For calendar-year single-member LLCs (and fiscal-year ones other than June 30), it's due on the 15th day of the fourth month, which is April 15 for a calendar year.

The Division's February 2025 notice lists March 15 for LLCs in general and doesn't separate out single-member LLCs. If you own a single-member LLC, filing and paying by March 15 meets both. If you file in April, April 15 is the date in the current instructions.

For 2026 tax years, the dates are Monday, March 15, 2027 for partnerships and S corporations, and Thursday, April 15, 2027 for calendar-year single-member LLCs and C corporations. When a due date falls on a weekend, it moves to the next business day, which is why the 2025 deadline moved from Saturday, March 15 to Monday, March 17, 2025.

What missing the $400 costs

The 2025 RI-1065 instructions list the charges on a late or unpaid return:

• Interest at 12% a year (1% a month) from the due date until payment.
• Late-filing penalty of 5% a month, up to 25%.
• Late-payment penalty of 0.5% a month, up to 25%.
• Delinquency charge of $100 if an LLC, LP or LLP doesn't pay the annual fee by the due date.

Unpaid years pile up. Notice 2025-01 says there's no time limit on collecting from non-filers. An LLC also needs a Letter of Good Standing from the Division at least five business days before it sells or transfers real estate or other major assets, and it can't get one until every past-due annual charge is paid. Closing an LLC works the same way: the final return goes with a request for a letter of good standing, and the letter has to be recorded with the Secretary of State within 30 days.

The Secretary of State's annual report is separate. LLCs file Form 632 between February 1 and May 1 with a $50 fee, and a $25 penalty applies after that, according to the Secretary of State's annual report page. Paying one doesn't satisfy the other.

The pass-through entity election in 2026

Since 2019, a Rhode Island partnership, LLC or S corporation can elect to pay state income tax at the entity level at 5.99%, filed on RI Schedule PTE with the RI-1065 or RI-1120S. The appeal is federal: the entity deducts the tax as a business expense, which gets around the federal limit on itemized state and local tax deductions for the owners.

Two things changed the math.

The owner credit is now 90%. For tax years beginning on or after January 1, 2025, R.I. Gen. Laws § 44-11-2.3 limits the state tax credit passed through to the owners to 90% of the tax the entity paid. Before 2025, owners got full credit. Now 10% of the entity tax is a real cost.

The add-back still applies. Owners report the PTE tax as an increasing modification on RI Schedule M, so their Rhode Island income is the same as it would have been without the election. The credit then offsets their Rhode Island tax.

The election has other effects too. An electing entity doesn't have to withhold for nonresident members on Schedule PTW, and the tax must actually be paid to generate the credit. Calendar-year entities typically pay estimates on April 15, June 15, September 15 and December 15. The $400 annual charge or minimum tax still applies on top.

A worked example: does the election pay for a Providence LLC?

Say you and a partner own a two-member Providence design firm taxed as a partnership. For 2026 it has $300,000 of Rhode Island income, split evenly. Both of you are in Rhode Island's top 5.99% bracket on this income and in the 32% federal bracket. Your personal state and local taxes are already at the federal deduction limit, so you can't deduct more Rhode Island tax on your own returns.

Without the election:

• Rhode Island tax on the $300,000: about $300,000 x 5.99% = $17,970, paid by the two of you.
• Federal deduction for that tax: none, because you're already at the limit.

With the election:

• Entity-level tax: $300,000 x 5.99% = $17,970, paid by the LLC.
• Federal benefit: the LLC deducts $17,970, so your combined federal income drops by that much. At 32%, that saves about $5,750.
• Owner credit: 90% x $17,970 = $16,173.
• Your Rhode Island tax is still about $17,970 after the add-back, minus the $16,173 credit, so you owe about $1,797 more on your personal returns.
• Total Rhode Island cost: $17,970 + $1,797 = $19,767, which is $1,797 more than without the election.

Net: about $5,750 of federal savings minus $1,797 of extra Rhode Island cost, so the election still saves roughly $3,950 in this example.

Now flip the facts. If the owners' personal state and local taxes are under the federal limit, they could deduct the Rhode Island tax themselves anyway, so most of the federal benefit disappears and the 10% haircut makes the election a loss. The same happens for owners whose own Rhode Island rate is below the flat 5.99% entity rate. Run both scenarios with your real numbers before you elect.

Common questions about the Rhode Island minimum tax

My LLC had no income in 2026. Do I still pay? Yes. The $400 annual charge applies for every year the LLC exists, with or without income.

I formed my LLC in November. Is the first year prorated? No. Notice 2025-01 says the charge applies to partial years, including the year of formation.

We closed the LLC in March. Do we owe for the final year? Yes, $400 for the year of dissolution, filed on a final return with the request for a letter of good standing.

Does the PTE election replace the $400? No. The annual charge or minimum tax is separate from the entity-level tax.

Is the $400 deductible on my federal return? For a business, an annual state charge to keep the entity in existence is generally an ordinary business expense. Your preparer will place it on the right line.

Can I file online? Yes, through the Division's Taxpayer Portal, which also meets the electronic filing mandate for businesses subject to it.

This guide is general information based on Rhode Island Division of Taxation Notice 2025-01 and the 2025 RI-1065 and RI-1120S instructions as of October 2026. Confirm the 2026 instructions when they are released, since due dates and PTE rules can change.

Stay current on Rhode Island's small charges

RKube Services handles bookkeeping and tax prep for small businesses across the US and Canada, including LLCs in Providence, Warwick, Cranston and Newport. We file the RI-1065 or RI-1120S and the $400 each year, track the Secretary of State report, and model the PTE election with your actual numbers before the first estimate is due. Start with a free scoping call and a 30-day trial: call (984) 234-7030 or visit rkubeservices.com.