The STR State Tax Changes Taking Effect in 2026. What Hosts in Rhode Island, Hawaii, and Beyond Are Now Paying

Rhode Island’s combined tax rate on whole-home short-term rentals nearly doubled on January 1, 2026, jumping from 8% to 14%. If you operate a vacation rental in the Ocean State and have not updated your pricing model yet, you are already three months behind. (I know, tax law is everyone’s favorite bedtime reading. Bear with me.)

At the same time, Hawaii quietly tacked on a 0.75 percentage point increase to its already substantial Transient Accommodations Tax, pushing the state TAT to 11%. The stated purpose is climate change mitigation, which is a perfectly reasonable policy goal that happens to land squarely on the income statements of STR operators.

This article is your compliance guide to the confirmed state-level STR tax changes that took effect in 2026. I will walk through what changed, when it took effect, who owes it, whether your platform collects it for you, and what the actual dollar impact looks like on a per-night basis. If you host in Rhode Island, Hawaii, or several other states with new lodging tax provisions, this is the article to bookmark before you file your Q1 returns.

This article provides general information and should not be construed as legal advice. Consult a qualified attorney in your jurisdiction for advice specific to your situation.

Rhode Island: The Biggest STR Tax Overhaul of 2026

Rhode Island did not just raise a rate. The state fundamentally restructured how it taxes whole-home short-term rentals. Two changes took effect simultaneously on January 1, 2026.

What Changed

Change 1: Local Hotel Tax Increase. The statewide “local” hotel tax rate increased from 1% to 2%. This applies to all short-term lodging, whether you rent a single room or an entire home. Every STR operator in Rhode Island is affected by this change.

Change 2: New 5% Whole-Home Short-Term Rental Tax. This is the bigger development. Rhode Island created an entirely new 5% tax that applies specifically to the short-term rental of a residential dwelling rented in its entirety. If a guest rents your whole house, condo, or apartment for 30 consecutive days or fewer, this tax applies. Room-only rentals are exempt from this particular levy.

Picture this: you own a three-bedroom beach cottage in Narragansett that you list on Airbnb as a whole-home rental. In 2025, your guests paid 8% in combined taxes (7% state sales tax plus 1% local hotel tax). Starting January 1, 2026, those same guests pay 14% (7% state sales tax, 5% whole-home STR tax, and 2% local hotel tax). That is a 75% increase in the tax rate on a single stay.

One important clarification from the Rhode Island Division of Taxation: a single short-term stay will not be subject to both the 5% statewide hotel tax and the 5% whole-home short-term rental tax. The statewide hotel tax applies to room-only rentals (hotels, B&Bs, hosted stays). The whole-home STR tax applies to entire-dwelling rentals. Both categories now land at the same combined 14% rate, but through different tax components.

The Dollar Impact: Rhode Island

Let me run the math on a $200/night whole-home listing in Rhode Island.

2025 (old rate): $200 x 8% = $16 in taxes per night. Guest pays $216 total.

2026 (new rate): $200 x 14% = $28 in taxes per night. Guest pays $228 total.

The taxes are collected from the guest on top of your nightly rate, so your gross payout does not change if your pricing stays the same. But here is the problem: guests see the total price. A listing that showed $216/night all-in during 2025 now shows $228/night. That $12 difference per night ($84 per week) may push price-sensitive guests toward hotels, longer-term rentals, or competing markets in Massachusetts or Connecticut where total lodging taxes can be lower.

If you absorb the tax increase by lowering your nightly rate to keep the all-in price at $216, you would need to drop your rate to roughly $189.47 ($189.47 x 1.14 = $215.99). That is a $10.53 per night hit to your gross revenue, or roughly $3,843 per year on a listing that books 365 nights.

Who Collects in Rhode Island

Good news for Rhode Island hosts using major platforms: Airbnb and VRBO are both required to register with the Rhode Island Division of Taxation, collect all applicable lodging taxes, and remit them to the state on the host’s behalf. If you book exclusively through these platforms, the collection and remittance happens automatically. You should still verify that your platform is collecting at the updated 2026 rates.

If you take direct bookings (through your own website, repeat guests, or any channel that is not a registered marketplace facilitator), you are personally responsible for collecting the taxes from guests and remitting them to Rhode Island. The state requires monthly or quarterly filing depending on your volume. One more note: all state and local taxes are based on the date of occupancy, not the date of booking. If a guest booked in November 2025 for a February 2026 stay, the 2026 rates apply.

For more on Rhode Island’s regulatory landscape, see our Rhode Island STR market overview.

Hawaii: The TAT Climbs Again

Hawaii’s relationship with short-term rental taxation is already complicated. The state imposes multiple overlapping taxes on transient accommodations, and the 2026 increase adds another layer to an already formidable stack.

What Changed

The state Transient Accommodations Tax (TAT) increased from 10.25% to 11%, effective January 1, 2026. The increase was enacted through SB1396 (signed into law in May 2025), which the legislature branded as a “green fee” for climate change mitigation. The additional 0.75 percentage points are projected to generate approximately $100 million annually, earmarked for conservation, renewable energy, and disaster preparedness.

The TAT applies to all transient accommodations rented for fewer than 180 consecutive days. That includes hotels, vacation rentals, timeshares, and (in a provision that is currently tied up in litigation) cruise ship cabins while docked at Hawaiian ports.

The Full Hawaii Tax Stack

To understand what a Hawaii STR host actually pays, you need to see the full picture. The TAT is just one layer.

• State TAT: 11% (up from 10.25%)
• County TAT Surcharge: 3% (all four counties have enacted the maximum allowed surcharge)
• General Excise Tax (GET): 4%
• County GET Surcharge: 0.5% (all four counties)

The combined tax burden on a Hawaiian short-term rental can exceed 18.5% of gross rental proceeds before you account for platform fees, cleaning costs, or any other operating expenses. That is among the highest effective STR tax rates in the nation.

The Dollar Impact: Hawaii

On a $200/night listing in Hawaii, looking at the TAT change alone:

2025 TAT: $200 x 10.25% = $20.50

2026 TAT: $200 x 11% = $22.00

The TAT increase costs $1.50 per night, or roughly $547.50 per year on a listing that books 365 nights. That may sound modest in isolation, but remember the full tax stack. At 18.5% combined, that same $200/night listing generates $37 in total taxes per occupied night. Over a year at 65% occupancy (237 nights), that is $8,769 in total tax obligations.

The 2025 total at roughly 17.75% on those same 237 nights would have been $8,414. The net annual increase from the TAT change alone: approximately $355.

Who Collects in Hawaii

This is where Hawaii gets particularly tricky for hosts. Unlike Rhode Island, Airbnb and VRBO do not collect and remit the TAT or GET in Hawaii. Hosts are solely responsible for registering with the Hawaii Department of Taxation, collecting all applicable taxes, and filing returns directly.

You need two separate tax registrations: a General Excise Tax (GET) license and a Transient Accommodations Tax (TAT) license. You may also need to file separately with your county for the county TAT surcharge. Filing is monthly or quarterly depending on your tax liability, and the penalties for late filing or underpayment are not gentle.

If you operate on Maui, our Maui STR market page covers the local regulatory environment in more detail.

Other States With 2026 Lodging Tax Changes

Rhode Island and Hawaii are the headline changes, but they are not the only jurisdictions that adjusted STR-related taxes in 2026. Here is what else shifted.

Eagle County, Colorado

Voters in Eagle County (home to Vail and Beaver Creek) approved Measure 1A in November 2025, doubling the county’s lodging tax from 2% to 4% effective January 1, 2026. For a ski-town STR market where nightly rates regularly exceed $400, the additional 2% adds meaningful cost. On a $500/night booking, the county lodging tax alone jumped from $10 to $20 per night.

Saratoga County, New York

Saratoga County is raising its local hotel occupancy tax from 1% to 3%. Combined with New York’s recently operational statewide STR tax framework (which requires platforms to collect and remit a 4% state sales tax component), Saratoga County hosts face an expanding tax obligation. For context on New York’s statewide framework, see our coverage of that legislation.

Michigan

Michigan passed enabling legislation that allows local governments to impose up to a 3% accommodations tax, subject to voter approval via ballot measure. No municipalities have enacted it yet, but this creates the legal framework for local lodging taxes in a state that previously lacked one. Michigan hosts should watch their local ballot initiatives closely.

California (Local Increases)

San Mateo County raised its transient occupancy tax from 14.5% to 15.5%. Several San Diego zones implemented new local rates ranging from 11.75% to 13.75%, with revenue earmarked for infrastructure and homelessness services.

Compliance Table: 2026 STR Tax Changes at a Glance

How to Adjust Your Pricing

If you have been operating since January 1 without accounting for these new rates, you have a few options. None of them are painless, but ignoring the problem is worse.

Option 1: Raise your nightly rate to offset the guest-facing price increase. This is the cleanest approach if your market supports it. Run your numbers: if your old all-in price was competitive, calculate what nightly rate produces the same all-in price under the new tax structure. In Rhode Island, a host who was charging $200/night with 8% tax ($216 all-in) would need to keep the rate at $200 and accept that the all-in price is now $228. Whether your market absorbs that depends on your competition and demand.

Option 2: Absorb part of the increase. Split the difference. Raise your rate slightly to cover some of the increase while keeping your all-in price from jumping too dramatically. This is the middle ground that most hosts will land on.

Option 3: Hold your rate and let the guest pay the difference. In high-demand markets (beachfront Rhode Island in summer, Maui during peak season), guests may not notice a $12/night increase in total price. Test it. Watch your booking conversion rate. If bookings hold steady, the market is telling you it can bear the increase.

Option 4: If you have been undercharging taxes since January 1. This applies specifically to Hawaii hosts who self-remit. If you collected at the old 10.25% TAT rate on January and February bookings, you owe the difference to the Hawaii Department of Taxation. File amended returns for the affected periods. The state charges interest on underpayments, and the penalties escalate quickly. Do not wait for an audit to correct this.

What to Watch for the Rest of 2026

Tax law does not sit still. Several developments are worth monitoring through the remainder of the year.

The Michigan enabling legislation is the most significant wildcard. If even a handful of popular vacation rental markets (Traverse City, Mackinac Island, Saugatuck) put accommodations tax measures on their next ballot, Michigan could go from a zero-local-lodging-tax state to a patchwork of local levies within a single election cycle.

Hawaii’s cruise ship TAT provision remains in litigation. If the courts uphold it, the precedent could embolden other coastal states to extend lodging taxes to new categories of transient accommodations.

Several state legislatures have introduced STR-specific tax bills in their 2026 sessions that have not yet passed. I will cover those as they move through committee. The trend line is clear: states and localities view STR taxation as an underutilized revenue source, and the legislative appetite for new levies is growing.

We do our best to keep our regulatory guides accurate and up to date, but ordinances change and we are only human. Always verify current requirements directly with your local municipality before making business decisions.

Make Smarter STR Decisions With Data

Tax changes like these directly affect your bottom line, and the right pricing strategy depends on your specific market. Use the StaySTRA Analyzer to run revenue projections that account for your local tax environment, seasonal demand patterns, and competitive landscape.

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