Rhode Island House Approves $14.3 Billion Budget with Tax Increases

Categories: Rhode Island Business NewsRhode Island News

The Rhode Island Statehouse symbolizes the recent budget approval and tax changes.

News Summary

Rhode Island’s House of Representatives has passed a proposed $14.3 billion budget for fiscal year 2026, awaiting Governor McKee’s approval. The budget includes a significant increase in the conveyance tax for home sellers and introduces a new tax on properties valued over $1 million, labeled the ‘Taylor Swift Tax.’ The Rhode Island Association of Realtors has expressed concerns over these tax hikes, fearing they could exacerbate challenges in the housing market. As discussions continue, stakeholders monitor potential impacts on affordability and the economy.

Rhode Island‘s House of Representatives has approved a $14.3 billion budget for fiscal year 2026, which is pending the signature of Governor Dan McKee. This proposed budget includes significant tax increases, notably a 63% hike in the conveyance tax for home sellers and a newly proposed tax, informally referred to as the “Taylor Swift Tax.”

The conveyance tax, a fee paid by home sellers, will rise from $2.30 to $3.75 for every $500 of a home’s selling price. For example, selling a home valued at $500,000 would now incur a conveyance tax of approximately $3,750, up from about $2,300. This increase is projected to impact both sellers and buyers, potentially making the already tight housing market even less affordable.

The Rhode Island Association of Realtors (RIAR) has voiced its concerns over the proposed tax hikes, arguing that they may worsen existing issues within the housing market. Criticism centers on the notion that higher taxes could discourage home sales and increase financial burdens on homeowners at a time when the market is already struggling.

In addition to the conveyance tax increase, the budget introduces a new tax targeting properties valued over $1 million that are not primary residences. This tax, unofficially labeled the “Taylor Swift Tax,” will impose an additional charge of $2.50 for every $500 assessed value above the $1 million threshold for properties that are unoccupied for more than 183 days per year. Notably, the musician Taylor Swift, who owns a property in Watch Hill valued at $17 million, could face an additional $136,000 tax burden should the budget be enacted.

Notably, the president of RIAR indicated that this tax is not exclusively aimed at wealthy homeowners but may also affect individuals inheriting properties. This aspect raises concerns about its broader implications on property ownership and the transfer of family estates.

Supporters of the budget, including House Speaker Joe Shekarchi, defend the tax increases as vital for funding critical services, such as healthcare. The changes to the conveyance tax and the introduction of the Taylor Swift Tax are set to take effect in July 2026 if the governor approves the budget.

Currently, the median real estate price in Rhode Island stands at approximately $512,750. Given this backdrop, critics have raised alarms that these tax proposals could further deter potential sales in an already constricted housing market—one in which affordability has become a pressing concern.

In response to these proposed changes, local real estate organizations are expected to lobby for amendments and modifications in future budget discussions. They argue that while funding needs to be addressed, it should not come at the expense of residents facing increased taxes and a challenging housing landscape.

As the state awaits the governor’s decision, stakeholders across the housing market are closely monitoring these developments, which could have lasting ramifications for the economy and property owners in Rhode Island.