Short Term Rentals

Rhode Island Short Term Rental Regulations

May 28, 2025

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Short Term Rentals

Rhode Island Airbnb Taxes 2025: The Complete Guide for Hosts

Starting an Airbnb in Rhode Island? You're entering one of New England's most popular vacation rental markets. From Newport's historic mansions to Block Island's coastal charm, the Ocean State attracts millions of visitors annually. However, success as a host depends on understanding Rhode Island's tax requirements for short-term rentals.

This guide breaks down everything you need to know about Rhode Island Airbnb taxes, compliance requirements, and local regulations to keep your hosting business profitable and legal.

Understanding Rhode Island's Short-Term Rental Tax Structure

Rhode Island operates a multi-tiered tax system for vacation rentals. Unlike some states with simple flat rates, the Ocean State combines state sales tax, lodging taxes, and municipal requirements that vary based on your property type and location.

What Qualifies as a Taxable Short-Term Rental

Rhode Island considers any rental of 30 days or less a short-term rental subject to lodging taxes. This includes:

  • Traditional Airbnb listings

  • VRBO properties

  • HomeAway rentals

  • Direct booking websites

  • Any accommodation rented for less than one month

Rhode Island State Tax Requirements for Airbnb Hosts

State Sales Tax: The Foundation

Every short-term rental in Rhode Island must collect 7% state sales tax on:

  • Base nightly rates

  • Cleaning fees

  • Pet fees

  • Additional service charges

  • Any other guest fees

This tax applies uniformly across all Rhode Island municipalities and property types.

Rhode Island Hotel Tax: Property-Specific Rates

The state imposes different hotel tax rates depending on how you rent your property:

Shared Property Rentals (Room in Your Home)

When guests rent a bedroom while you occupy other parts of the house:

  • 6% state hotel tax applies

  • Total state tax burden: 13% (7% sales + 6% hotel)

Entire Property Rentals (Whole House/Apartment)

When guests have exclusive access to the entire property:

  • 1% state hotel tax applies

  • Total state tax burden: 8% (7% sales + 1% hotel)

This significant rate difference makes whole-property rentals more tax-efficient for both hosts and guests.

How Tax Collection Works in Rhode Island

Platform-Based Collection (Airbnb, VRBO, etc.)

Rhode Island law requires hosting platforms to act as tax collectors. When you list on major platforms:

Automatic Collection: Airbnb, VRBO, and similar sites automatically add applicable taxes to guest reservations

Direct Remittance: Platforms send collected taxes directly to Rhode Island Department of Taxation

Host Relief: You don't need to handle tax collection or filing for platform-based bookings

Direct Booking Tax Obligations

If you accept bookings through your own website, social media, or referrals:

  1. Register with Rhode Island Division of Taxation

  2. Obtain a sales tax permit

  3. Collect applicable taxes from guests

  4. File monthly tax returns

  5. Remit collected taxes by the 20th of each month

Failure to register for direct bookings can result in penalties and back-tax assessments.

Local Tax Requirements: City-by-City Breakdown

Standard Rhode Island Cities and Towns

Most Rhode Island municipalities rely solely on state tax collection. In these areas, your total tax rates are:

  • Room rentals: 13% (state taxes only)

  • Whole properties: 8% (state taxes only)

This applies to popular vacation rental destinations including:

  • Westerly and Watch Hill

  • Narragansett

  • Block Island

  • Providence

  • Warwick

  • Bristol

Newport: The High-Tax Exception

Newport, home to famous Gilded Age mansions and a thriving tourism industry, imposes additional municipal lodging taxes:

Newport Room Rental Taxes

  • 7% state sales tax

  • 6% state hotel tax

  • 6% Newport rooms tax

  • Combined rate: 19%

Newport Whole-Property Taxes

  • 7% state sales tax

  • 1% state hotel tax

  • 1% Newport local tax

  • Combined rate: 9%

Newport collects its local portions separately from state taxes, requiring hosts to understand dual compliance requirements.

Emerging Local Tax Trends

While Newport remains the primary exception, other Rhode Island tourist destinations are considering local lodging taxes. Stay informed about potential changes in:

  • South Kingstown (including Matunuck Beach)

  • Charlestown

  • Little Compton

  • Jamestown

Real-World Tax Calculations for Rhode Island Airbnb

Example 1: Warwick Whole-House Rental

Booking Details:

  • Property: 3-bedroom house near T.F. Green Airport

  • Rate: $180 per night

  • Stay: 4 nights

  • Cleaning fee: $75

  • Pet fee: $25

Tax Calculation:

  • Rental subtotal: ($180 × 4) + $75 + $25 = $820

  • State sales tax (7%): $820 × 0.07 = $57.40

  • State hotel tax (1%): $820 × 0.01 = $8.20

  • Total taxes: $65.60

  • Guest pays: $885.60

Example 2: Newport Mansion Room Rental

Booking Details:

  • Property: Historic mansion bedroom

  • Rate: $350 per night

  • Stay: 2 nights

  • No additional fees

Tax Calculation:

  • Rental subtotal: $350 × 2 = $700

  • State sales tax (7%): $700 × 0.07 = $49.00

  • State hotel tax (6%): $700 × 0.06 = $42.00

  • Newport rooms tax (6%): $700 × 0.06 = $42.00

  • Total taxes: $133.00

  • Guest pays: $833.00

Rhode Island Airbnb Compliance Checklist

For Platform-Only Hosts (Airbnb/VRBO)

  • ✅ Verify your platform collects all applicable taxes

  • ✅ Check guest receipts show correct tax amounts

  • ✅ Keep records of all bookings and tax collections

  • ✅ Monitor local tax law changes in your municipality

For Direct Booking Hosts

  • ✅ Register with Rhode Island Division of Taxation

  • ✅ Obtain sales tax permit

  • ✅ Set up monthly filing schedule

  • ✅ Implement tax collection system for guests

  • ✅ Maintain detailed booking and payment records

  • ✅ File returns by the 20th of each month

For All Rhode Island Hosts

  • ✅ Understand your property's tax classification (room vs. whole property)

  • ✅ Stay updated on local municipal requirements

  • ✅ Consider consulting a tax professional for complex situations

  • ✅ Keep documentation for potential audits

Common Rhode Island Airbnb Tax Mistakes to Avoid

Misclassifying Your Property Type

The difference between room (13%/19%) and whole-property (8%/9%) tax rates is substantial. Ensure accurate classification to avoid overcharging guests or underpaying taxes.

Ignoring Direct Booking Requirements

Many hosts incorrectly assume platform tax collection covers all scenarios. Direct bookings require separate registration and compliance.

Overlooking Local Requirements

While most Rhode Island cities don't impose additional taxes, failing to research your specific municipality can lead to compliance issues.

Poor Record Keeping

Whether using platforms or handling direct bookings, maintain detailed records of all transactions, taxes collected, and guest information.

Resources for Rhode Island Airbnb Hosts

Official Government Resources

  • Rhode Island Division of Taxation: tax.ri.gov

  • Business Registration: Apply for tax permits online

  • Municipal Offices: Contact your city/town clerk for local requirements

Professional Support

  • Consult a CPA familiar with Rhode Island lodging taxes

  • Consider vacation rental management companies for compliance assistance

  • Join local host groups for regulatory updates

The Bottom Line on Rhode Island Airbnb Taxes

Rhode Island's vacation rental tax system balances state revenue needs with local community requirements. While the multi-tiered structure may seem complex, most hosts find compliance manageable thanks to platform-based collection systems.

Key points to remember:

  • State taxes apply universally: 7% sales tax plus 1-6% hotel tax

  • Local taxes are rare: Only Newport currently imposes additional rates

  • Property type matters: Whole-property rentals enjoy lower tax rates

  • Platform collection simplifies compliance: Airbnb and VRBO handle most requirements automatically

Success as a Rhode Island Airbnb host depends on understanding these requirements, maintaining compliance, and staying informed about regulatory changes. The taxes you collect support the infrastructure and services that make Rhode Island an attractive destination, benefiting both your business and the broader tourism economy.

This guide provides general information about Rhode Island short-term rental taxes as of May 2025. Tax laws can change frequently. Always verify current requirements with the Rhode Island Division of Taxation and your local municipality before making business decisions.