News Summary
Starting July 1, 2026, Rhode Island will introduce a new property tax surcharge targeting second homes valued over $1 million that are not occupied. Dubbed the ‘Taylor Swift Tax’ by social media, this legislation aims to generate funds for affordable housing but has raised concerns regarding its impact on wealthy property owners and investment in local real estate. Critics fear it may deter buyers, while supporters argue it could address housing shortages. The measure reflects growing concerns over the state’s real estate market and affordability.
Rhode Island will introduce a new property tax surcharge named the Non-Owner Occupied Property Tax starting July 1, 2026. This tax is specifically aimed at second homes valued at or over $1 million that are not occupied by their owners or long-term renters for more than 183 days within a year. The tax rate will be set at $2.50 for every $500 of the assessed property value exceeding the initial $1 million threshold.
For instance, a property valued at $1.5 million will incur an annual tax of $2,500, while a property assessed at $3 million will face a tax bill of $10,000. The legislation has informally garnered the moniker “Taylor Swift Tax” on social media platforms, although the popular singer has no direct connection or influence over the tax.
Taylor Swift owns a mansion in Westerly, Rhode Island, valued at approximately $17.75 million, which could lead to an additional tax of around $136,000 annually, should the home not meet the occupancy requirement. Even more striking, around 70% of homes in Westerly were utilized for “seasonal, recreational, or occasional use” in 2022, far exceeding the state average. The local real estate market has experienced escalating demand; in 2024, almost 25% of residential transactions in Rhode Island involved out-of-state buyers.
As it stands, the median home prices reflect this demand, with properties in Westerly averaging $525,000, while homes in Newport are about $854,000, and those in Jamestown near $1.6 million. Real estate experts are worried that this new tax may deter potential buyers and negatively impact the local real estate market.
Critics of the tax express concerns that it unfairly penalizes wealthy property owners who contribute to local economies while utilizing few municipal services. Conversely, supporters advocate that the tax could generate necessary funds for affordable housing initiatives and encourage affluent homeowners to either rent or occupy their properties more frequently, potentially alleviating the shortage of available housing.
The Rhode Island Association of Realtors has voiced apprehension about how the tax might dissuade investment in second homes within the state. Additionally, Airbnb hosts could be adversely affected since they depend on short-term rentals for their income.
Proponents of the tax are aiming to tackle issues stemming from rising home prices and a dwindling supply of affordable housing by diminishing the number of unoccupied luxury residences. It is noteworthy that earlier attempts to impose a similar tax, including a proposal made in 2015, faced substantial opposition and did not come to fruition.
Similar luxury property taxes have been proposed or enforced in various states, including Montana, as well as in different localities throughout California and Massachusetts. Real estate brokers underscore that summer residents significantly contribute to the economic activities of local businesses and warn that the tax could be detrimental to community vibrancy.
In light of the impending tax, some potential buyers are now reconsidering Rhode Island as a plausible second-home destination, further complicating the property market landscape.
Deeper Dive: News & Info About This Topic
- National Law Review: New Rhode Island Tax on Non-Owner Occupied Properties
- CNBC: Taylor Swift Tax on High-End Vacation Homes
- Brown Daily Herald: Taylor Swift Tax Targets Owners of RI Summer Homes
- USA Today: Taylor Swift Tax in Rhode Island
- Quartz: Taylor Swift Rhode Island Property Tax
- Wikipedia: Taxation in the United States
- Encyclopedia Britannica: Property Tax
- Google Search: Rhode Island Property Tax
Author: STAFF HERE PROVIDENCE WRITER
PROVIDENCE STAFF WRITER The PROVIDENCE STAFF WRITER represents the experienced team at HEREProvidence.com, your go-to source for actionable local news and information in Providence, Providence County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as WaterFire, Rhode Island International Film Festival, and Rhode Island Comic Con. Our coverage extends to key organizations like the Greater Providence Chamber of Commerce and Providence Warwick Convention & Visitors Bureau, plus leading businesses in finance and manufacturing that power the local economy such as Citizens Financial Group and Textron. As part of the broader HERE network, we provide comprehensive, credible insights into Rhode Island's dynamic landscape.
