Starting next summer, Rhode Island will impose a new property tax surcharge on luxury second homes valued at or over $1 million that aren’t used as a primary residence.
On its own, that tax might not get a lot of attention. However, the new levy, which supporters say would help address housing shortages and fund affordable housing programs, has been trending on social media, after being nicknamed the “Taylor Swift tax.”
Just to be clear: Swift is not directly involved with the tax, but reportedly owns a sprawling $17 million mansion in the upscale Watch Hill area of Rhode Island, which would be subject to the new measure.
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As a result, the property tax fee puts the Ocean State at the forefront of a growing movement to tax owners of high-end vacation properties.
So the question on some homeowners’ minds is: Could a similar so-called “Taylor Swift Tax” be coming to your property in another state? Here’s more to know.
What the ‘Taylor Swift Tax’ means for vacation homes in 2026
Under what is officially called the Non-Owner Property Tax Act, the following will take effect in Rhode Island as of July 1, 2026:
- Rhode Island’s new tax will impact second homes valued at $1 million or more as of Dec. 31st of the tax year and not used as a primary residence or rented out for at least 183 days per year.
- The surcharge applies to every $500 of assessed value above $1 million at a rate of $2.50 per $500.
- So, a $3 million second-home owner could face a surcharge of approximately $10,000 annually, in addition to regular property taxes.
The surcharge is designed to encourage owners to either use their properties more frequently or make them available for rent, reducing the number of empty houses. According to state officials, the tax base will adjust annually for inflation starting in 2027.
While the tax targets all non-owner-occupied properties over $1 million, the association with Swift’s beachfront estate has made the nickname stick in headlines.
For example, for Swift’s Watch Hill mansion, the tax will add approximately $136,000 annually, reportedly nearly doubling the current property tax bill for that property.
Why Rhode Island is leading the way
In Rhode Island, coastal towns have experienced soaring home prices and a shortage of affordable housing. Some say wealthy absentee owners contribute to this by buying second homes, which have driven prices up, leaving homes vacant for large parts of the year.
Some lawmakers see the “Taylor Swift tax” as a win-win approach: generate new revenue to invest in affordable housing and nudge absentee owners to either use or rent their properties more regularly.
But not everyone is on board. Some real estate agents and some residents say that the tax unfairly penalizes people who already pay substantial property taxes and contribute significantly to local economies.
- The argument is that many of these second homeowners, including long-time families and investors, are vital patrons of local businesses, restaurants, and services, even if they don’t live there year-round.
- Critics also worry that the surcharge could chill the market, forcing some owners to sell and potentially harming towns that rely on second-home tourism revenue.
Will other states follow and increase property taxes on vacation homes?
Rhode Island isn’t alone on this. Similar surcharges on expensive vacation homes and second homes have been proposed or enacted in states like Montana and localities in California and Massachusetts.
Montana: Starting in 2025, Montana implemented a graduated property tax system that increases rates on luxury homes and non-primary residences. Homes valued above $1.5 million face a tax rate of 2.2%, higher than the lower brackets for more modest homes. This new structure was signed into law by Gov. Greg Gianforte.
Cape Cod: Cape Cod is considering a 2% transfer fee on luxury home sales over $2 million to help fund affordable housing. The proposal, backed by local leaders and housing advocates, is currently under review by the Barnstable County Assembly of Delegates. If approved, the fee could generate up to $56 million annually to support year-round housing for working families, seniors, and young people.
L.A. “mansion tax”: As Kiplinger has reported, Los Angeles’ Measure ULA in California, the so-called “mansion tax,” was approved by voters in 2022 and took effect in April 2023. As of July 1, 2025, it imposes a 4% transfer tax on property sales between $5.3 million and $10.6 million, and a 5.5% tax on sales above $10.6 million, reportedly generating hundreds of millions of dollars for affordable housing and homelessness programs.
As state and local governments look for new revenue streams, these models could offer a framework for states looking to balance tax fairness and affordability in the housing market.
Rhode Island ‘Taylor Swift Tax’: What homeowners need to know
To avoid the tax, owners may have to either make the home their primary residence (spending at least half the year there) or rent it out for the majority of the time.
Whether the so-called “Taylor Swift Tax” succeeds will be a story that “Swifties,” homeowners, and policymakers will watch.
In the meantime, pay attention to key tax changes in your state and consult a trusted tax professional to understand how any changes might impact your bottom line.
