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Rhode Island’s new Non-Owner Occupied Property Tax took effect Wednesday, imposing a levy on residential properties assessed above $1 million that are not used as a primary residence.
The tax, enacted under Rhode Island’s Fiscal Year 2026 budget, applies to homes that are not occupied by the owner or a tenant for at least 183 days per year.
Property owners will pay $2.50 for every $500 of assessed value above the first $1 million, in addition to existing local property taxes. Revenue from the tax will be directed to Rhode Island’s Low-Income Housing Tax Credit Fund to support affordable housing development statewide.
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According to Rhode Island Division of Taxation spokesperson Paul Grimaldi, the state identified 22,431 residential properties with assessed values above $1 million as of May. Of those, 8,245 properties were classified as non-owner-occupied and could be subject to the new tax, reported WPRI-TV.
The tax has been nicknamed the “Taylor Swift tax” in local media because of Taylor Swift’s Watch Hill mansion, though the singer is not mentioned in the law itself. Based on municipal assessment records, Swift’s property could face an additional annual tax bill of roughly $136,000.
Exemptions And Revenue Outlook
The state said homeowners may qualify for exemptions if the property is rented long-term for more than 183 days annually or operates as a registered short-term rental booked for more than half the year while paying state lodging taxes.
An earlier fiscal analysis from the Division of Taxation projected the levy would generate about $24.5 million in its first year, rising to more than $27 million by 2031 as compliance improves.
Property owners subject to the tax can pay quarterly beginning Sept. 15 or pay the full amount in a lump sum by that date.
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Debate Over Affordability And Investment
The measure has drawn criticism from real estate groups concerned about its effect on investment and property values.
Michael Pereira, president of the Rhode Island Association of Realtors, said the nickname obscures the broader economic impact of the tax. He also raised concerns about whether homeowners may face administrative hurdles proving exemption eligibility, according to WPRI.
Rhode Island’s move reflects a broader policy trend of taxing luxury second homes to address housing affordability. Earlier this year, New York approved a pied-à-terre tax on high-value non-primary residences in New York City, with lawmakers expecting the measure to generate roughly $500 million annually to support affordability and budget needs.
Rhode Island’s new levy also comes amid a broader national debate over property taxes and housing costs. Earlier this year, SpaceX and Tesla Inc CEO Elon Musk reignited that discussion by saying property tax makes a home “a de facto lease from the government,” reflecting growing frustration among homeowners over rising tax burdens.
The growing use of second-home taxes highlights how states are increasingly targeting high-value residential properties as housing affordability pressures intensify.
Image via Shutterstock
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