Effective January 1, 2026, Rhode Island has enacted two changes to the taxation of short-term lodging rentals. In Rhode Island, short-term rentals include all lodging rentals where the rental period is 30 consecutive days or less.
The first change impacts all short-term rentals. Effective January 1, 2026, the state’s local hotel tax rate increases from 1% to 2%. This tax applies to all short-term rentals in Rhode Island, including hotels, rentals through hosting platforms (e.g. Airbnb, VRBO), and other short-term lodging rentals.
The second change impacts whole home short-term rentals. Effective January 1, 2026, a new 5% tax applies to the short-term rental of a residential dwelling rented in its entirety. The whole home short-term rental tax is distinct from the 5% state hotel tax on single room rentals, including hotel rooms and other short-term rentals. No single short-term stay would be subject to both the 5% state hotel tax and the 5% whole home short-term rental tax.
All state and local taxes are based on the date of occupancy, not the date of booking. Short-term rentals of a residential dwelling with an occupancy on or after January 1, 2026, are subject to the new tax. For rentals booked in advance, if the rental period is on or after January 1, 2026, the rental will be subject to the new tax.
If a stay is booked and full payment is made in 2025 for a 2026 rental, the taxes collected at the time of booking should be at the 2025 rate, and the difference in the tax rate for 2026 should be charged at the time of checkout from the rental.
The DOR has provided a helpful chart outlining which taxes apply in different scenarios. The notice (2025-09) with the chart can be found on the Division of Taxation’s Notices page. (Notice 2025-09, Rhode Island Department of Revenue, Division of Taxation, October 24, 2025)