Are you booking short-term rentals for 2026 now? Keep in mind that a new tax on short-term rentals of entire homes, cottages and condominium units will take effect, and the local hotel tax will increase. The taxes are based on when the rental is occupied and not when a renter books or pays for it.
Here are the taxes that will affect short-term rentals of 30 or fewer consecutive days as of January 1, 2026:
| 2025 | January 1, 2026 | |
| A new whole home tax of 5% will take effect on 1/1/26. | 0% | 5% |
| The local hotel tax will increase from 1% to 2% on 1/1/26. | 1% | 2% |
| The 7% sales tax will remain the same. | 7% | 7% |
| 8% | 14% |
The Rhode Island Association of REALTORS® has contacted the RI Division of Taxation with a number of questions about the implementation of these taxes. While the Division of Taxation researches answers to our questions, it would be wise to collect the 14% in taxes now for 2026 short-term rentals and refund any excess if the Division of Taxation determines that all of these will not apply.
For more details, see the official R.I. Division of Taxation's Information: Effective 1/1/26 - Changes to the taxation of short-term rentals
If you have questions, please contact the Rhode Island Division of Taxation Taxpayer Experience Office:
Email: [email protected]
Phone: 401.574.8983
REALTORS®: You can also download this flyer to explain these and other real estate tax changes resulting from the 2025 legislative session. For more information, please contact the RIAR Legal Department at [email protected].