You probably don’t think of August as “tax time,” but you should if you rent your place of residence.
That’s because Aug. 15 is the deadline to file for the “renter’s credit,” which isn’t really a credit, but a property tax refund that applies to those who pay rent. But you must remember to file for it, and a lot of renters don’t.
It could get a lot easier to remember via HF1653.
Sponsored by Rep. Nathan Coulter (DFL-Bloomington), the renter’s credit would become a refundable tax credit available when filing your income taxes in the early part of the year. The bill would also change the method for calculating the level of your credit from household income to adjusted gross income. Hence, more renters would qualify, and their refunds would grow.
The bill’s provisions would be effective for tax year 2023, or for refunds based on rent paid in 2023, meaning the first credits calculated as part of the income tax return would be claimed during the 2024 filing period.
On Wednesday, the House Property Tax Division laid the bill over for possible inclusion in its division report.
So why are renters allowed a property tax refund if they don’t own property? They do pay property taxes, but indirectly: Their landlord pays them with those costs built into the rent.
“As we think about the effects of rising property taxes on those who can least afford it, renters have really been among the hardest hit,” Coulter said. “With this bill, 119,000 renters who currently qualify but don’t apply would get money back in their pockets. And, by changing to adjusted gross income, an additional 33,000 renters who don’t currently qualify would.”
As amended, the bill would allow any renter making under $73,380 in adjusted gross income to receive a tax credit. The maximum credits would range between $2,570 for the lowest earners and $250 for the highest.
It's estimated that the bill’s changes would decrease the General Fund by $373.6 million in fiscal year 2024, then $136.2 million in fiscal year 2025, with similar figures in ensuing years.
Rep. Paul Anderson (R-Starbuck) asked why the provisions wouldn’t be extended to homeowners. “Folks get their property tax statements in the spring, so this change could work well for them.”
Coulter said he’d be open to a similar bill targeted toward homeowners, noting that such a provision was part of the 2022 tax bill that was never passed, as was the renter’s credit change.