Taylor Swift ‘tax’ goes mainstream: US states target luxury second homes

Rhode Island has kicked off a fresh round of chatter in America’s heated housing debate after enacting a new annual levy on expensive second homes—quickly nicknamed the “Taylor Swift tax”.

The idea is simple: ask wealthier, non-resident owners to chip in more and use the cash to support housing for others. The measure forms part of the 2026 state budget.

From July 2026, a non-owner-occupied property in Rhode Island valued at more than $1 million (€853 thousand) will face an extra charge each year of $2.50 (€2.13) for every $500 (€426) of value above the first million.

In other words, a $2 million (€1.7 million) beach house would owe roughly $5,000 (€4,266) annually. The threshold will be adjusted for inflation from mid-2027, and there’s a notable carve-out—homes rented for more than half the year, or 183 days, will avoid the levy.

That nudge is deliberate. Namely, if you keep the lights on you get spared—and now Rhode Island's initiative is catching on in the rest of the US.

Is Tay-Tay being targeted?

The tax is nicknamed the “Taylor Swift tax” because Taylor Swift owns a very high-profile seaside mansion in Watch Hill, Rhode Island and the new levy targets pricey second homes like hers.

The local media shorthand stuck as the proposal gained steam, even though it applies to all luxury second homes—not just Swift’s.

Other US states test the waters

Rhode Island is not alone in testing out the new tax policy. Montana will also reshape property taxes in a way that shifts more of the burden towards second homes and short-term rentals from 2026.

On Cape Cod in Massachusetts—one of the most famous second-home markets in the US—local leaders are weighing a regional transfer fee on high-end sales, with the proceeds funnelled into housing.

While the tools are different, the goal would be the same—raise revenue and discourage “lights-out” neighbourhoods. Supporters argue this targets wealth tied up in luxury pads without hiking taxes on local families.

Critics, including estate agents, warn it could chill the top end of the market and scare off big-spending seasonal residents. If high-value buyers pause their buying or maintenance of second homes, restaurants, tradespeople and local shops in resort towns could feel it first.

For owners and would-be buyers of expensive holiday homes, the cost of holding property in popular US destinations is set to rise. For local councils and states under pressure to tackle affordability, “mansion” or second-home taxes are becoming a politically palatable tool.

The next test will be whether revenues arrive as forecast—and whether higher levies change behaviour by pushing more luxury homes into year-round rental markets, or simply push deep-pocketed buyers to look elsewhere.