The introduction of the Taylor Swift tax in Rhode Island is generating significant concern among short-term landlords. Officially known as the Non-Owner-Occupied Property Tax Act, this legislation imposes additional financial burdens on part-time residents owning vacation properties.
As similar measures emerge in other states, tensions are rising among local governments, real estate professionals, and affluent homeowners. This article examines the specifics of the tax and its broader implications for the rental market.
Understanding the Taylor Swift tax
Set to take effect on July 1, 2026, the Taylor Swift tax imposes a substantial annual surcharge on residences classified as non-primary dwellings. Specifically, it targets properties valued at over $1 million that are occupied for fewer than 183 days in a year. The tax is calculated at $2.50 for every $500 of assessed value exceeding this threshold.
For a property valued at $3 million, landlords could face an additional annual tax of approximately $10,000, in addition to regular property taxes. Notably, pop icon Taylor Swift will be liable for an estimated $136,000 annually due to her part-time residence in Watch Hill, Rhode Island.
The rationale behind the tax
The primary goal of this tax is to generate revenue to support housing initiatives while discouraging property owners from leaving homes vacant for extended periods. For short-term rental owners, this could severely impact their financial viability, as they will face taxes on rental income along with the new surcharge if their properties are rented out for more than half the year.
Reactions from the real estate sector
The response from the real estate industry has been predominantly negative. Some agents argue that this tax penalizes individuals who contribute to local economies by visiting and spending money in these communities. For example, Donna Krueger-Simmons, a sales agent in Watch Hill, criticized the tax as a burden on homeowners who maintain residences elsewhere.
Lori Joyal, another agent, voiced similar concerns, stating that the tax could deter wealthy individuals from investing in Rhode Island, prompting them to seek vacation homes in states with more favorable tax regulations.
Similar measures in other states
Rhode Island is not alone in this trend. For instance, Montana has proposed similar reforms that differentiate between primary and secondary residences. Starting in 2026, non-primary residents will face a flat tax rate of 1.90%, regardless of the property’s value. However, those residing in their homes for at least seven months may qualify for reduced rates.
In Cape Cod, Massachusetts, local authorities are considering a mansion tax, which would impose a 2% real estate transfer tax on sales exceeding $2 million. Proponents argue that this could generate substantial revenue to address the affordable housing crisis.
Potential strategies for landlords
For landlords in states like Rhode Island and Montana, navigating these new tax laws necessitates careful planning. While compliance with the new regulations is essential, savvy investors may explore areas of flexibility. For instance, if a portion of a property is utilized for personal occupancy, landlords could potentially reduce their tax liability.
As similar measures emerge in other states, tensions are rising among local governments, real estate professionals, and affluent homeowners. This article examines the specifics of the tax and its broader implications for the rental market.0
As similar measures emerge in other states, tensions are rising among local governments, real estate professionals, and affluent homeowners. This article examines the specifics of the tax and its broader implications for the rental market.1