Legal Insights
Effective July 1, 2026, Rhode Island Gen. Laws § 44‑72‑2 and § 44‑72‑4, known as the Non‑Owner Occupied Property Tax Act or the “Taylor Swift Tax,” takes aim at high-value vacant homes in the Ocean State.[1] Looking to lessen the financial burden on local budgets, Rhode Island lawmakers will now collect a new tax which is expected to impact more than 8,000 properties. Here is how the tax is calculated, who it will apply to, and how it may be avoided:
Your $1.2-million vacation home now costs an additional $1,000 annually. The Taylor Swift Tax rate is $2.50 for every $500 of assessed value. To calculate your tax liability, subtract $1 million from your vacation home’s assessed value, divide that number by 500, and multiply that number by 2.5. The resulting total is due in four equal installments during the “Privilege Year,” which is the period of July 1 through June 30, directly preceding the tax year. While some may balk at what amounts to two general admission concert tickets for the Eras Tour, lawmakers tout this as a victory for local services and the ever-growing need for affordable housing. With two Westerly waterfront homes on the market presently listed in excess of $20 million, just one property, if subject to the tax, will bring in $80,000 in new money for the state each year.[2]
Who Should Be Prepared for This New Tax Hit? And What About Other States?
Much like Taylor’s biting jabs at some ex-partners, this tax does not apply to everyone. The tax is assessed on residential properties that are not owner occupied.[3] A loophole: If the Ocean State is your home away from home, you could avoid the tax by renting or residing in the property for more than 183 days each year. If you plan to use this exemption, make sure you “keep the receipts,” as the statute calls for backup to prove residency or rent.
If the property is held in trust, was sold after July 1, 2025, or is a multifamily dwelling, the waters become a bit murkier. You will need to review your trust language regarding who is authorized to reside in the property, check that exemptions apply to one more unit, or prepare for an additional tax burden. If you sold a property subject to the tax in the last year, confirm with your settlement agent if a withholding was made so there are no surprises come tax time.
This new tax calls to light the importance of residency for those with multiple properties in different states. For New Englanders, crossing a state border can have massive implications for estate and income tax obligations. A short car ride from Massachusetts to Rhode Island can result in an additional $25,000 of estate tax liability. Turn north and drive to New Hampshire and do away with state estate tax all together.[4] “Snowbirds” who wish to establish residency in Florida and spend time in New England know this all too well. Proper planning, knowledge, and documentation is paramount. For example, estates of even well-established Florida residents who own Massachusetts real property at the time of their passing can be shocked to learn Massachusetts has a “non-resident decedent estate tax.” Even if you are determined to pass the Commonwealth’s facts and circumstances test regarding your residency, individual ownership of real property in the Commonwealth subjects you to Massachusetts’ favorite pastime (tax assessment). Presently, proper planning can avoid this trap for the unwary, but deliberate planning is required.
While Rhode Island is making headlines with its catchy pop-star reference, homeowners across the country face higher property tax rates, additional surcharges, and the loss of benefits available to year-round residents. Take the city of Charleston, South Carolina, which tacks on an additional two percent to the assessment ratio for vacation homes,[5] or the Sunshine State, which penalizes those who cannot take advantage of its homestead exemption.[6] If your estate planning and tax attorneys are not taking into consideration these costs, potential estate tax savings, and your traveling habits, you may certainly be leaving money on the table for your eventual beneficiaries.
Conclusion
Before you shed a teardrop for Taylor’s increased tax liability, remember that her marriage to Kansas City Chiefs star tight end Travis Kelce opens an entirely new playbook of wealth-transfer strategies. Her advisors are likely already taking advantage of tools such as the unlimited marital deduction, Spousal Lifetime Access Trusts (SLATs), and the future estate tax portability that could accompany her husband’s estate. If history has taught us anything, we can only hope a well-crafted prenup was inked well before the “I do’s.”
[1] Rhode Island Gen. Laws § 44‑72‑2 and § 44‑72‑4 — Non‑Owner Occupied Property Tax Act applies to homes with an assessed value over $1 million as of December 31, 2025.
[2] 14 Pawcatuck Ave, Westerly Rhode, currently listed for sale at $23,500,000 has an assessed value of $16,834.600.
[3] Residential classification is determined by the local city or town where the property is located. Non-owner-occupied properties are defined as those not occupied by the owner for 183 days or more a year.
[4] The individual Massachusetts estate tax exemption amount is $2,000,000.00; the Rhode Island individual estate tax exemption is $1,838,056.00; New Hampshire does not have a state estate tax.
[5] In Charleston, SC, a non-primary resident’s home is taxed at 6% of the property’s fair market value, as determined by the Charleston County Assessor’s Office, where primary residents are tax at 4%.
[6] Homestead properties in Florida can receive an exemption of up to $50,000.00 and increases on the home’s assessed value is capped at 3% or the change in the consumer price index, which is lower.
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