RI Lawmakers Approve Tax Relief For Year-Round Newport Residents

NEWPORT, RI — State lawmakers approved a bill allowing Newport to change its residential tax structure to provide tax relief for year-round city residents.

The legislation (2022-H 8182, 2022-S 2898A) now goes to Gov. Dan McKee for consideration.

If McKee signs the bill and the Newport City Council adopts an ordinance, the city can establish two residential tax rates — one for owner-occupied housing, and one for housing that is not owner-occupied. The bill was requested by the Newport City Council pursuant to a recommendation by the city’s ad hoc Tax Relief Committee, which was created by the council to look into ways to provide relief to year-round residents.

"As we know, our whole state and Newport especially are deep in an affordable housing crisis, and residential property tax relief is one tool to help address affordability," state Sen. Dawn Euer (D-Newport) said. "We applaud our local officials, particularly the Tax Relief Committee, for their work in developing this idea. Vacation rentals and short-term rentals take away from year-round housing, and while they do provide revenue, they contribute to our city’s housing crisis. Making a distinction between them will give residents the tax relief they need, and encourage property owners to create and maintain the permanent housing we desperately need."

State law already contains a provision allowing Newport to enact a homestead exemption, which is a common tool to provide lower taxes to residents. But the city never actually put one into place, and doing so now would result in a reduction in the city’s tax collections that would require the city to raise rates, possibly shifting some burden onto businesses.

City officials said they want to keep the annual tax levy from all residential properties at its current level — about $79 million — but adopt a lower tax rate on residential properties that qualify as owner-occupied. It would then make up the difference in revenue by adopting a higher rate for the non-owner occupied residential properties.

The legislation is enabling, meaning the City Council would have to adopt ordinances and regulations to actually carry out the idea. The plan being discussed by city officials would require homeowners to apply annually to classify their home as owner-occupied.

"At its core, this legislation is about making housing more affordable in Newport," said state Rep. Lauren Carson (D-Newport), "This is a way to lower the burden on year-round residents and to push back a bit on the trend of our city’s residential properties being bought up and used as short-term rentals. We’re happy to support this creative effort to provide tax relief and make living in our city more affordable and ultimately more accessible to our residents."