Removes the exemption from the state hotel tax for residences rented in their entirety on a hosting platform on or after January 1, 2026, for a period of thirty (30) nights or less.
Summary
S0045 amends Rhode Island’s hotel tax law to expand the state hotel tax to certain short-term rentals. Under current law, a house, condominium, or other residential dwelling rented in its entirety is generally exempt from the 5% hotel tax. This bill removes that exemption for residences rented through a hosting platform for rental activity on or after January 1, 2026, when the rental period is 30 nights or less. The bill also leaves in place the existing hotel tax framework for hotels, travel packages, and room resellers, and it continues the separate 1% local hotel tax on hotel occupancy.
The bill preserves and clarifies existing administration and collection rules under the state sales and use tax chapter. It also retains Newport’s special authority to collect the state hotel tax from hotels located in the city and to report and remit those collections on a set schedule. The act would take effect immediately upon passage, but the short-term rental tax change would apply only to rental activity on or after January 1, 2026.
Impact
This bill would broaden the tax base for Rhode Island’s hotel tax by treating qualifying short-term rentals on hosting platforms as taxable hotel occupancy, rather than exempt residential rentals. It would affect owners and operators of homes, condominiums, and other dwellings rented in their entirety for 30 nights or less through platforms such as short-term rental marketplaces, while leaving traditional hotels and the local hotel tax structure largely unchanged. The bill would also require the Division of Taxation to administer and collect the tax under existing hotel tax procedures, with Newport’s special collection authority preserved for hotels in that city.
Sentiment
No committee transcript or recorded vote information was provided, so there is no documented debate or voting pattern to assess. Based on the bill text and caption, the measure appears to be a revenue and tax-clarification proposal aimed at aligning short-term rental taxation more closely with hotel taxation. The available materials do not show formal support or opposition, but the proposal is likely to be viewed as a tax fairness and revenue measure by supporters and as a new cost on short-term rental hosts by opponents.
Contention
The main point of contention is the removal of the tax exemption for entire residences rented on hosting platforms for stays of 30 nights or less. Supporters would likely argue that these rentals compete with hotels and should be taxed similarly, while opponents may contend that the change burdens homeowners and short-term rental hosts, especially those using platforms for supplemental income. Another possible issue is the effective date structure: the act takes effect upon passage, but the tax change is delayed until January 1, 2026, which may raise questions about compliance planning and implementation.