Protecting the Renters' Credit

The Minnesota Budget Project opposes cuts to the Renters' Credit. The Renters' Credit is an important tool to ensure that low- and moderate-income Minnesotans do not pay too high a share of their incomes in property taxes.

Issue Overview

Like all Minnesotans, Minnesota renters want safe, affordable homes for themselves and their families. But some Minnesotans earning low wages or on fixed incomes struggle to afford the rent and basic necessities.

The Renters' Credit provides a property tax refund to about 328,000 households, 28 percent of which include seniors or people with severe disabilities. In parts of Greater Minnesota, an even higher share of those who receive the Renters' Credit are seniors or people with disabilities.

The Renters' Credit refunds a portion of the property taxes that renters have paid through their rents. About 70 percent of those who qualify have household incomes roughly $31,000 or less.

There is growing recognition of how a lack of affordable housing puts a damper on economic growth in many Minnesota communities. Cutting the Renters' Credit would make it even harder for people who already struggle to pay the bills. Minnesotans report that when they receive this property tax refund, they use it to buy medicine or school clothes for their children, to catch up on bills, or for other basic needs. This spending in turn boosts our local economies.

Status

The Renters' Credit faces two threats this legislative session:

  1. The recent federal tax bill could have the unintended consequence of cutting Property Tax Refunds for renters by $34 million and homeowners by $50 million per year. That's because Minnesota's Property Tax Refund formula includes an exemption for seniors, people with disabilities, and family dependents that is calculated based on a provision in federal law that has been repealed. Minnesota needs to restore these exemption amounts in our state tax law to avoid these painful cuts to property tax refunds.
  2. House File 2186 would cut the Renters' Credit. Starting in Tax Year 2018, this bill makes changes in the formula for calculating the credit, which would result in about a $41 million per year cut in Renters' Credits in total. That's an average reduction of about $115 for more than 340,000 households across the state, with the largest cuts falling on residents of Greater Minnesota and the city of St. Paul.

More Information

Staff contact: Nan Madden, Minnesota Budget Project Director, 651-757-3084

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