“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 percent cap,” RIPEC President and CEO Michael DiBiase said in a statement.
Five communities far exceeded the tax levy cap.
Little Compton, a seaside town of just 3,584 people, saw its tax levy spike by 11.78 percent in fiscal year 2026. Pawtucket, the state’s fourth-largest city, had a 6.4 percent increase, while Providence, the state’s largest city and capital, had a 5.85 percent increase. Woonsocket’s tax levy went up by 5.5 percent, and East Greenwich’s levy rose by 5.42 percent.
Meanwhile, Narragansett’s levy inched over the cap at 4.02 percent and Cumberland’s levy was 4.01 percent. Both towns attributed those overages to rounding errors and did not receive prior authorization to go over the cap.
Exemptions to the 4 percent cap require certification of a “significant revenue loss” or “expenditure need” by either the state Department of Revenue or Auditor General, plus approval from four-fifths of a municipality’s governing body. Providence, Woonsocket, and Little Compton did not receive certification but were authorized to exceed the cap through state legislation.
In fiscal year 2026, the statewide municipal tax levy increased by 3.7 percent, or $98.3 million — the largest increase in 10 years, according to the report.
Justine Oliva, RIPEC’s policy and research director, cited two factors for that overall increase: Federal funding from the pandemic period is drying up, and local governments are taking on debt to build new schools.
She noted that reasons for property taxes vary from town to town. For example, she said Little Compton had “structural issues” because the town was “relying on surplus funds for a period of time,” she said.
Also, some municipalities, such as North Providence and Woonsocket, had no tax increases or very small tax increases in recent years, but are now facing larger tax hikes.
Oliva said four municipalities are expected to exceed the 4 percent tax levy cap in the 2027 fiscal year, which begins July 1: East Greenwich, Barrington, North Providence, and Cranston, the state’s second-largest city.
The report said property tax growth is likely to continue next year with the so-called “Taylor Swift tax,” which slaps a new statewide tax of $2.50 for every $500 of the assessed value in excess of $1 million on non-owner-occupied houses.
The Taylor Swift tax will apply to about 9,000 to 10,000 properties and generate about $25 million a year, according to the report. Revenue from that tax will go into the state’s Low Income Housing Tax Credit Fund.
Oliva said the group will be keeping an eye on the administration of the new tax because it will be the first tax on real property administered by the state Division of Taxation. The state does administer a tax on tangible telecommunications property, but otherwise property taxation in Rhode Island has been administered entirely at the local level, she noted.
The report warned that businesses are bearing a growing share of Rhode Island’s property tax burden.
This year, the statewide commercial property tax rate was 54 percent higher than the residential rate, up from 41 percent in fiscal year 2022, the report said.
In Providence, commercial property owners face the largest disparities in Rhode Island and among the largest disparities nationally, with commercial real estate taxed at 3.5 times the single-family owner-occupied residential rate, according to the report. That results in an annual tax bill of $29,200 on a $1 million commercial property, which is $20,800 higher than the tax on an owner-occupied single-family home of the same value, the report said.
“When we looked at local tax trends and who is impacted the most, it became clear that cities and towns are increasingly shifting a greater share of the burden onto landlords, renters, and businesses,” DiBiase said. “These patterns are most pronounced in the communities where most renters live and where most of the state’s business activity is concentrated.”
The RIPEC report called for Rhode Island to maintain the 4 percent cap on annual property tax levies, and to set constitutional limits on tax rate differentials among property classes.
“The General Assembly has provided cities and towns with very few guardrails,” DiBiase said. “Given the recent jump in property taxes, which are already high, the urgency for action is even greater. The state can either pursue meaningful reforms or continue to allow tax inequities to grow, eroding affordability and economic growth.”
The report noted that cities and towns in Rhode Island are required to conduct either a full or statistical revaluation of residential and commercial property values once every three years, along staggered timelines.
RIPEC called for Rhode Island to begin requiring property revaluations every year. Oliva said that while costs might be a concern, states such as Massachusetts do revaluations every year, and much depends on whether the process involves going door-to-door.
“Rhode Island is currently experiencing large swings in valuation that render 3-year-old assessments highly inaccurate,” the report said. “The more frequently property is assessed, the more accurate are assessments relative to market value.”
Edward Fitzpatrick can be reached at edward.fitzpatrick@globe.com. Follow him @FitzProv.