Several tax changes took effect in Rhode Island on Jan. 1, including a new tax on whole-home short-term rentals and inflation adjustments to the estate tax threshold, the state Division of Taxation announced this week.

The changes affect short-term rental operators, homebuyers, estate planning and several business tax credits.

Short-term rentals

Owners of short-term rentals face two changes this year. The local hotel tax that applies to all short-term rentals, including hotels, doubled from 1% to 2%.

A new 5% whole-home short-term rental tax now applies to any residential dwelling rented in its entirety. The tax covers houses, condos, mobile homes and other residential dwellings, including vacation rentals and those offered through online hosting platforms such as Airbnb and VRBO.

Real estate conveyance tax

The Tier 2 threshold for the real estate conveyance tax increased to $824,000, up from $800,000. The threshold will now be adjusted annually based on the Consumer Price Index. The Tier 2 rate of $3.75 per $500 applies to residential property sales exceeding the threshold, in addition to the Tier 1 rate.

Estate tax

The Rhode Island estate tax threshold rose to $1,838,056 for decedents dying in 2026, up from $1,802,431 in 2025. The estate tax credit amount increased to $87,940 from $85,375.

Interest rates

Interest on tax overpayments dropped to 7.25% from 8%. Rates on underpayments remain at 18% for trust fund taxes and 12% for all other taxes.

Business tax credits

Several business tax credits were eliminated for tax years beginning Jan. 1, 2026, including the Jobs Growth Act Tax Credit, Specialized Investment Tax Credit and Employment Tax Credit. The Research and Development Expense Credit carryforward period increased from seven years to 15 years.

For more information, contact the Division of Taxation at 401-574-8829 or visit tax.ri.gov.

Here are some of The Providence Journal’s most-read stories for the week of Jan. 11, supported by your subscriptions.

Here are the week’s top reads on providencejournal.com:

Cranston’s Garden City Center has announced two new restaurants that will be opening their doors this year and in 2027, and confirmed the sites for two other previously announced restaurants.

Each of the four restaurants will open its first Rhode Island locations at Garden City Center.

Journal food editor Gail Ciampa fills you in on the new lineup, where you’ll be able to get everything from noodles to bagels to authentic Mexican specialties and New Haven-style thin-crust pizzas.

Dining: Newport Creamery is gone. These restaurants are coming to Garden City.

University of Rhode Island men’s basketball coach Ryan “Archie” Miller was once again the highest-earning state employee of the year in 2025, marking his third year at the top and among familiar faces.

A list of the state’s top 200 earners provided by the Department of Administration tallied up employees’ wages in 2025, until Nov. 15. It had little variation from previous years and saw the same five highest earners as 2024.

Each employee earned more than $200,000, and as usual it was overwhelmingly full of URI administrators and coaches, along with state police, correctional officers and health care staff at state hospitals.  

Political Scene: Which RI state employees made the most money in 2025?

I asked Anna Gruttadauria if the terrible news of the Swiss nightclub fire had brought back memories of her daughter Pam.

Yes, said Anna – but really, she has thought of Pam every day since losing her almost 23 years ago in The Station nightclub fire in West Warwick. One hundred people died in that tragedy, and Pam Gruttadauria was the last. She persevered for three months at Massachusetts General Hospital before succumbing to her injuries at age 33.

The fire that killed 40 people at a club called Le Constellation at the Crans-Montana ski resort in Switzerland was remarkably similar to the Station fire. Both were caused by indoor pyrotechnics that ignited flammable materials inside.

Anna Gruttadauria and her husband, Joe, can’t help but ask themselves: How is it possible that the lessons of the Station fire were not learned?

Mark Patinkin: Swiss nightclub fire brings back memories for family of Station victim

Imagine a crowd of A-list celebrities descending on the village of Watch Hill in Westerly this summer to attend the wedding of mega celebrity Taylor Swift and football star Travis Kelce.

To Chuck O’Koomian, who owns Airline Express Limousine and Car Service with his wife, Ginny Cauley, it’s like a scene out of a horror movie.

“It’s going to be a logistical nightmare,” O’Koomian told The Providence Journal, as part of our survey of wedding vendors about what it would take for the Ocean State to host a wedding befitting the world’s most popular woman.

No date or location has been announced for the nuptials, but here’s what would be involved in getting a large celebrity crowd to a wedding held at Swift’s Watch Hill mansion, the nearby Ocean House or the Watch Hill Chapel, where former Miss Universe Olivia Culpo and football star Christian McCaffrey tied the knot in 2024.

Local news: Why a Taylor Swift wedding might shut down Westerly streets

Amy Henion doesn’t live in a tiny house, per se, but her apartment is about as close as you can get to that in Providence. 

NORTH PROVIDENCE, R.I. — Sure, “three guys from Boston” — Matt Damon, Ben Affleck, and Jimmy Fallon — received a lot of attention when they read off every city and town in Massachusetts on “The Tonight Show.”

But they aren’t the only ones with wicked regional accents. And it takes a lot less time to listen to “two guys from Rhode Island” — Rhode Island Report podcast host Edward Fitzpatrick and North Providence Mayor Charles A. “Charlie” Lombardi — tick off the 39 cities and towns in the smallest state.

Hopefully, this educational video will head off any further mispronunciations of the word Pawtucket.