Rhode Island real estate professionals are criticizing two new taxes that will increase costs for Ocean State homeowners, including a levy dubbed the “Taylor Swift tax.” 

State lawmakers last week approved a $14 billion fiscal year 2026 budget, which now awaits Gov. Dan McKee’s signature. Included in the proposed budget is a 63% increase in a conveyance tax for all home sellers, and a new tax on homes appraised at $1 million or more which are unoccupied for more than 183 days per year. 

The pending tax on pricier homes has been dubbed the “Taylor Swift tax” as the singer could owe $136,000 in new taxes on her Rhode Island shoreline mansion, according to the Providence Journal. The Rhode Island Association of Realtors and the Rhode Island Mortgage Bankers Association have criticized the bill affecting the state’s small and expensive housing market. 

“These aren’t intended to increase the critical housing shortage and will likely exacerbate it,” said Travis McDermott, an attorney and board member of the RIMBA. 

What are the taxes?

The current conveyance tax in Rhode Island for sellers assess $4.60 per every $1,000 of a home’s value. The new tax would up that to $7.50 per $1,000. 

A “Tier 2” tax on properties selling over $800,000 would also rise. Instead of sellers paying $4.60 per $1,000 of value above $800,000, they would be taxed $7.50 per $1,000 over that limit. 

The “Taylor Swift tax” meanwhile would charge homeowners an additional $5 per $1,000 of assessed value on homes valued at $1 million or more that aren’t primary residences. The changes would go into effect July 2026.

How the taxes could impact the housing market

The nation’s smallest state has a competitive housing market, with a median price of $512,750 in May, according to the Rhode Island Association of Realtors. While home prices in some of the nation’s largest and fastest-moving markets are stalling or beginning to decline, Ocean State home prices have risen almost $50,000 since the beginning of 2025, the trade group said. 

The state is also last in the nation in residential construction since 2020, and saw homes built at the slowest pace in the U.S. last year, the Providence Journal reported. Those assessments last month also came ahead of what could be disruptive impacts to home building by tariffs. 

The looming conveyance tax increase could add thousands of dollars to a home seller’s bill, local real estate trade groups warned. A homeowner offloading a $500,000 property could see their conveyance tax jump from $2,300 to $3,750. Lower-priced homes could see more modest tax increases of a few hundred dollars, but $200,000 homes in Rhode Island are few and far between, McDermott explained. 

“Whether the seller tries to negotiate that away by not making concessions, or starts at a higher asking price, either way would further restrict the liquid market for real property,” he said. 

The Taylor Swift tax meanwhile could supercharge annual tax bills, and is already discouraging buyers who were weighing Rhode Island properties against Connecticut and Massachusetts homes, said Chris Whitten, president of the RIAR and founder of Premeer Real Estate. 

Rhode Island House Speaker K. Joseph Shekarchi, a Democrat, said there was no estimate for the revenue the vacation home tax would generate, and the proceeds would funnel into the state’s Low Income Housing Tax Credit program, according to the Rhode Island Current. 

Shekarchi, in emailed comments Monday evening, said lawmakers had to find additional revenues to invest in primary care and Medicaid. Regarding the Taylor Swift tax, the House Speaker said he felt it was more equitable to increase the costs on the pricier homes than tax working families.

On the conveyance tax increase, the lawmaker highlighted the Tier 2 tax and noted it’s a one-time fee. “I do not believe a fee of a few thousand dollars will be a significantly detrimental factor in the purchase of a million dollar home,” said Shekarchi.

Trade groups said they have no way to block the taxes if they’re signed into law, but said they’ll lobby for amendments in the next budget bill. 

“They’re balancing the budget on the backs of homeowners in Rhode Island,” Whitten said. “The last thing we need to do is give them another reason not to sell, because we have such tight inventory in Rhode Island.”