Rhode Island’s ‘Taylor Swift tax’ on vacation homes aims to boost affordable housing

Perched on a hill high above Westerly’s East Beach sits one of Taylor Swift’s eight houses. The $28 million home is adorned with more windows than can be easily counted, giving it views of the Atlantic lapping the sandy shores below.As of this summer, though, the price of those views is higher – more than $136,400 a year higher.Under a law nicknamed the “Taylor Swift tax,” which went into effect July 1, Ms. Swift and thousands of others who own second homes in the Ocean State now face higher property taxes. People who own homes they do not occupy or rent out for at least 183 days of the year are charged $2.50 for every $500 of assessed value over $1 million. That’s on top of local property taxes. Why We Wrote This A new tax on vacation homes in Rhode Island targets pricey beach properties, such as the one owned by pop star Taylor Swift. Locally, residents debate whether the effort can raise funds for affordable housing without driving away vacation-home owners who contribute to the economy. Like a proposed wealth tax in California, in which voters in November will decide whether to levy a one-time, 5% tax on billionaires, Rhode Island’s measure has ignited debate about how much the well-off should contribute to government coffers. Proponents see a way to ease housing costs for locals by encouraging rentals and raising revenue for affordable housing projects, while critics argue it will drive out wealthy residents and undercut the tax base.“You can think of lots of ways to justify such a tax, but it’s effectively a way of getting revenue from a group of people you think should pay more,” says John Sabelhaus, a senior fellow in tax policy at the Brookings Institution in Washington. “You can imagine that there’s going to be less demand to own these homes and not live in them.”In August, a group of more than two dozen homeowners sued Rhode Island over the new law, arguing that it “does violence to one of our democracy’s animating principles: ‘no taxation without representation,’” because it targets out-of-state residents. The state has not yet responded to that lawsuit in court. Cameron Pugh/The Christian Science Monitor Luxury beach houses are seen throughout the Watch Hill neighborhood in Westerly, Rhode Island, Sept. 2, 2026. A group of about two-dozen homeowners sued Rhode Island over a new tax law, arguing that it “does violence to one of our democracy’s animating principles: ‘no taxation without representation,’” because it targets out-of-state residents. It’s not uncommon for jurisdictions to impose higher taxes on properties that aren’t primary residences, says John Friedman, an economist at Brown University. But measures targeting high-value and vacant properties have picked up steam nationally recently, as politicians try to boost housing affordability, buttress state budgets, and address public concerns that the wealthy aren’t paying their fair share.In July, New York City implemented an additional tax on condominiums and co-ops worth more than $1 million, and houses worth more than $5 million. In 2025, Montana passed a bill lowering tax rates for people who live in or rent out their homes for at least seven months out of the year. (Both of those measures face court challenges.) Berkeley, California, has levied a tax on homes left vacant for more than half the year since 2024.Rhode Island’s tax on second homes is likely to have ripple effects in a small state where 37% of vacant properties are for “seasonal, recreational, or occasional use,” according to census data. A June report by the Rhode Island Public Expenditure Council, a Providence-based nonprofit, said the tax will apply to between 9,000 and 10,000 homes and raise about $25 million annually.A push for affordabilityState lawmakers designed the law so that the tax revenue will go to the state’s low-income housing tax credit fund, or LIHTC, which was established in 2023 to give developers greater incentive to build housing for people with low and moderate incomes.About one-third of Rhode Islanders spend more than one-third of their income on housing.“We have a problem when hardworking Rhode Islanders – teachers, or nurses, or waiters, or whatever it is – are struggling to keep a roof over their heads,” says Democratic state Sen. Meghan Kallman, who sponsored the law. “The bill is really a modest way to ask people who have more to contribute a little bit more.”Proponents of the new tax have also argued that it could incentivize some people to rent out their homes, since doing so would exempt them from a higher bill.Yet, while housing affordability is a problem in Rhode Island, just as it is in the rest of the country, experts are skeptical that renters can afford $1 million beach homes, rather than apartments near urban centers such as Providence. Cameron Pugh/The Christian Science Monitor Boats float in the water of Watch Hill Cove in Westerly, Rhode Island, near the Watch Hill Yacht Club, Sept. 2, 2026. Some residents point to such luxuries as reasons to tax affluent second-home owners in an effort to fund affordable housing statewide. “I don’t think having cheaper beach houses in Narragansett is necessarily a solution to our state housing crisis,” Professor Friedman says.He also says that low-income housing tax credits “do not substantially increase the supply of low-income housing.” He cites a 2024 study on the federal version of the program that found that 75% of parcels receiving a tax credit would have been developed regardless. “LIHTC is thus a very expensive way to increase housing.”Over the whistle of sea breeze in Westerly’s exclusive Watch Hill neighborhood – the location of Ms. Swift’s mansion and many other lavish homes – Lynn Pucci says that wealthier residents should pay the tax.“These people are in the top 1%. So, it’s hard for me to have pity,” she says. Clad in rainbow-colored beach gear and a wide-brimmed sunhat, Ms. Pucci, a Westerly native, sweeps her arm out, gesturing to the luxury boats bobbing in azure water just feet away. “I mean, look at the yachts.”Out-of-staters purchased nearly half of all single-family homes and condominiums worth more than $1 million in Rhode Island between 2019 and 2024, according to an analysis of real estate data by The Providence Journal. Since 2019, the average price of a home in the state has ballooned by 72% to more than $515,000, according to Zillow. By contrast, the state’s average salary rose by 24% during the same time frame, census data shows.Will longtime summer residents leave?Yet, in Westerly, many summer residents are more than just regular visitors. They’re often maintaining long-standing family ties to this beach town straddling the state’s border with Connecticut. Theodore Howard, who owns a second home in Westerly, says he has visited the town for more than 50 years.“I think it’s a little unfair to people that come up here during the summer and spend a lot of money,” Mr. Howard says of the tax. He argues, too, that many of those being charged are nowhere near Ms. Swift’s level of pop-star wealth. Even a small home in Westerly, purchased years ago, can run a high price now because of its location.“Some people that own these houses just happen to have families that bought them a zillion years ago,” Mr. Howard says. “It doesn’t mean they’re rich or anything.”In a blue and white building near sand dunes that roll in easy waves toward the Atlantic, Michelle Vacca, a Westerly native and real estate agent, echoes that sentiment. She says that one of her clients purchased a home in the 1960s for around $35,000. Now, she says, that property is worth about $3 million.“It just seems unfair,” she says, next to a computer monitor displaying a photo of a seagull. “It seems as though there’s a money grab for people who made a smart investment choice when they were young.”Like other taxes on the wealthy, the “Taylor Swift tax” has sparked concern that wealthier residents will move elsewhere. There’s mixed evidence of this happening in other cases, says Mr. Sabelhaus, from Brookings. Generally, he says, people are more likely to move if there’s “an equally desirable place to live with very low taxes.”That might be the case here, says Professor Friedman, because “there are a lot of very nice places to have second homes.”Yet taxes on the wealthy have also come with big payoffs for state coffers. In 2023, Massachusetts implemented a 4% surtax on personal incomes exceeding $1 million. Before the measure passed, the Massachusetts Budget and Policy Center projected it would generate at least $2 billion a year in revenue; in fiscal year 2025, it raked in $3 billion.Abby Godino, a resident of Charlestown, another beach getaway, wants Rhode Island to be welcoming to tourists and the significant economic contributions they bring to the state.Nevertheless, she says a second home is a luxury worth taxing, given how many people struggle to afford even one. Nearly 40% of Rhode Islanders do not own their homes, according to census data.Ms. Godino, who owns a construction company, says she and her partner could only afford to buy a home by purchasing one in foreclosure and making repairs themselves.“I can acknowledge that ... people who come here for summer – that’s a tradition that’s 100, 150 years old,” she says. “There’s some symbiosis here. And we just need to keep some balance so it can continue to be a nice place for everyone to be.”