Rhode Island property tax increases accelerated sharply in fiscal year 2026 amid rapid growth in property values and widening gaps among classes of taxpayers, according to a new analysis from the Rhode Island Public Expenditure Council.
The statewide municipal tax levy rose 3.7%, or $98.3 million, in fiscal 2026, the largest increase in a decade and above projected inflation of 2.8%, the report found. Seven cities and towns — nearly one in five — exceeded the state’s mandated 4% levy cap, the highest number in the last decade and well above the prior nine-year average of 2.2 communities. Rhode Island taxpayers already face the 10th-highest property tax levels in the nation, at $2,505 per capita in fiscal 2023, 22% above the U.S. total.
The report projects further acceleration next year with a new statewide tax on high-value, non-owner-occupied residential property, expected to generate about $25 million annually.
“With Rhode Island property taxpayers already facing some of the highest property tax levels in the country, it’s concerning that several communities are raising taxes beyond the 4.0% cap,” said Michael DiBiase, president and CEO of RIPEC. He said that when the council examined who is most affected, it became clear that cities and towns are increasingly shifting the burden onto landlords, renters and businesses, with the patterns most pronounced where most renters live and where business activity is concentrated.
Assessed property values also grew rapidly across the state, the analysis found, surging $61.47 billion, or 42%, between fiscal 2023 and fiscal 2026 — 2.5 times the growth rate of the preceding three-year period. Residential real estate drove the increase, rising $55.16 billion, or 47%, over three years and more than doubling over nine years. Commercial real estate grew 26% over the same three years.
Businesses are bearing a growing share of the burden, according to the report. The statewide effective commercial property tax rate was 54% higher than the residential rate in fiscal 2026, up from 41% in fiscal 2022. In Providence, the report says, commercial property owners face the largest disparities in the state and among the highest in large U.S. cities, with commercial real estate taxed at 3.5 times the single-family owner-occupied residential rate. That results in an annual tax bill of $29,200 on a $1 million commercial property — $20,800 more than the tax on an owner-occupied single-family home of equal value.
Renters and landlords are also increasingly affected by local policies that favor owner-occupied housing, the council found. Larger apartment buildings are typically classified as commercial property and taxed at higher rates in 21 municipalities, and 12 municipalities use homestead exemptions that shift the burden onto non-owner-occupied properties. In some communities, the report says, that translates into an annual tax bill gap of nearly $3,000 between owner-occupied and non-owner-occupied single-family homes of equal value at the median sale price — a cost often passed on to renters, who are more likely than homeowners to be cost burdened.
“These policies are not only about fairness but also have real consequences for two of Rhode Island’s most pressing challenges: housing affordability and economic prosperity,” DiBiase said. He noted that property taxes account for nearly 20% of housing costs and about 40% of state and local business taxes in Rhode Island, influencing decisions about business formation and expansion as well as rental prices and the feasibility of building new housing.
The report recommends maintaining the state’s 4% levy cap, establishing constitutional limits on tax rate differentials among property classes, moving toward annual property revaluations and expanding targeted relief for vulnerable taxpayers.
“These issues have been building for years without meaningful reform,” DiBiase said, adding that the General Assembly has given cities and towns few guardrails and that the recent jump in already-high property taxes makes action more urgent. He said the state can either pursue meaningful reforms or continue to allow tax inequities to grow.
The full analysis is available on RIPEC’s website.
