Removes the exemption from the state hotel tax for residences rented in their entirety.
Summary
H5476 amends Rhode Island’s hotel tax law to remove the current exemption for houses, condominiums, and other residential dwellings when they are rented in their entirety. Under existing law, the 5% state hotel tax applies to hotel stays, travel packages, and room resellers, but whole-home rentals are excluded; this bill would make those rentals taxable in the same way as other short-term lodging. The bill also preserves the existing framework for administration and collection by the Division of Taxation, and it keeps the separate local hotel tax structure in place.
In addition to the state hotel tax change, the bill continues the 1% local hotel tax and the requirement that those revenues be distributed to the municipality where the hotel is located. It also retains Newport’s special authority to collect the state hotel tax directly from hotels in the city, along with its reporting and delinquent-tax collection obligations. The bill is set to take effect on January 1, 2026, giving affected taxpayers and municipalities time to prepare for the change.
Impact
The bill would expand the tax base under § 44-18-36.1 by subjecting whole-unit residential rentals used as short-term lodging to the 5% state hotel tax, increasing tax liability for owners, hosts, and rental platforms involved in vacation rentals and similar accommodations. It would not alter the general sales tax structure, but it would change how lodging transactions are taxed and could increase hotel-tax revenue for the state and, indirectly, local governments through existing distribution mechanisms. The bill leaves intact the local 1% hotel tax, the Providence convention authority-related provisions, and Newport’s separate collection authority.
Sentiment
Based on the bill text and available context, the measure appears to be a revenue-focused tax policy proposal with no recorded committee debate or votes in the provided materials. The stated purpose is straightforward: to eliminate a lodging-tax exemption for whole-home rentals. Because there are no transcripts or vote records, there is no documented public sentiment in the supplied record beyond the bill’s clear intent to broaden taxation of short-term residential rentals.
Contention
The likely point of contention is the treatment of short-term rentals such as Airbnb-style whole-home stays. Supporters would likely view the bill as closing a tax loophole and creating parity between hotels and comparable lodging, while opponents may argue it raises costs for homeowners, hosts, and visitors, and could burden the short-term rental market. Another possible issue is the special Newport collection authority, though the bill does not change that arrangement; the main dispute is whether residential rentals rented in their entirety should continue to be exempt from the hotel tax.