Rhode Island’s 2026 budget bill, No. 5076 SUB A, as amended, introduced Rhode Island General Law § 44-72-1 et seq., the “Non-Owner Occupied Property Tax Act” (the “Act”), also coined as the “Taylor Swift Tax.” The stated purpose of the Act is to require property owners of non-owner occupied property in the State of Rhode Island to: (i) pay a fair share of the cost of providing certain essential state services to protect the public health, safety, and welfare; and (ii) spend more time at their properties, contributing to their communities and maintenance of their properties. The entire tax collected attributable to the Act (the “Tax”) shall be contributed to the low-income housing tax credit fund established pursuant to R.I.G.L. § 44-71-11.
For tax years beginning on or after July 1, 2026, the annual Tax is $2.50 for each $500.00, or fractional part, of assessed value in excess of $1,000,000.00 of “non-owner occupied” residential property within the state during the taxable year. For tax years beginning on or after July 1, 2027, the assessed value threshold of $1,000,000.00 shall be adjusted by the percentage increase in the Consumer Price Index (CPI).
“Non-owner occupied,” means that the residential property (i) does not serve as the owner’s primary residence; and (ii) is not occupied by the owner of the property for a majority of (more than 183) days during a given taxable year.[1]
The Act provides for several exemptions, particularly the Act shall not apply to, or any tax therefrom be assessed against, any properties or buildings that: (i) are rented or were rented for a period of more than 183 days during the prior taxable year and subject to the provisions of Chapter 18 of Title 34; or (ii) any properties or buildings that are rented or were rented and are subject to tax pursuant to Chapter 18 of Title 44.
Chapter 18 of Title 34 of the Rhode Island General Laws is the Residential Landlord and Tenant Act. More specifically, R.I.G.L. § 34-18 applies, regulates and determines rights, obligations, and remedies under a rental agreement, wherever made, for a dwelling unit located within Rhode Island.
Chapter 18 of Title 44 of the Rhode Island General Laws covers Sales and Use Taxes. “Sales Tax” means a tax is imposed upon sales at retail in this state, including charges for rentals of living quarters in hotels as defined in § 42-63.1-2, rooming houses, or tourist camps, at the rate of seven percent (7%) of the gross receipts of the retailer from the sales or rental charges; provided, that the tax imposed on charges for the rentals applies only to the first period of not exceeding thirty (30) consecutive calendar days of each rental. Excluded from this tax are those living quarters in hotels, rooming houses, or tourist camps for which the occupant has a written lease for the living quarters which lease covers a rental period of twelve (12) months or more.[2] “Sales” means and includes: (11) The rental of living quarters in any hotel, rooming house, or tourist camp.[3]
The Act provides for payment of the Tax to the Rhode Island Division of Taxation but does not state the mechanism for assessing the Tax. To date, the Division of Taxation has not issued any regulations, rules, or forms regarding the Tax.
Taxpayers are encouraged to maintain diligent records to determine their amount of liability, including, but not limited to rental agreements, payments for rent, bank statements for payment of residential expenses, utility bills, and any other records establishing residency or non-residency for the period of three (3) years following the date of filing of any returns required.
[1] R.I.G.L. § 44-72-3(3)
[2] R.I.G.L. § 44-18-18
[3] R.I.G.L. § 44-18-7
