Protecting and Strengthening the Renters' Credit

The Minnesota Budget Project supports protecting and strengthening the Renters' Credit, which provides a property tax refund so that low- and moderate-income Minnesotans do not pay too high a share of their incomes in property taxes.

What happened in the 2019 Legislative Session?

Unfortunately, the final tax bill did not include the House's proposed expansion of the Renters' Credit, which would have increased the Renters' Credit by about $12 million for about 323,000 currently eligible households. It would have also increased the maximum income that a household can have and still qualify for the credit up to $75,000. Newly eligible renters would have seen an average refund of about $303, for a total increase of $10 million. Similar expansion ideas were considered this session as House File 2349 (Loeffler) / Senate File 2585 (Dziedzic).

The Renters' Credit will grow more slowly in future years because the final tax bill adopted chained CPI, a slower-growing measure, to make annual inflation adjustments across the tax code.

What's at stake

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 their 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 living 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.

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. In addition, there is growing recognition of how a lack of affordable housing puts a damper on economic growth and job creation in many Minnesota communities.

Strengthening the Renters' Credit would also advance racial equity. In Minnesota, people of color are much more likely to be renters and more likely to be earning lower incomes. But disparities in homeownership also exist when comparing whites and people of color of similar incomes, reflecting current barriers to wealth building and a history of policies that excluded African Americans and other people of color from homeownership.

Not only should Minnesota policymakers take action to strengthen the Renters' Credit, but they also should protect it as they consider how to update the state's tax code in response to the 2017 federal tax bill. If the state acts to simply conform to federal tax changes, that could cut the Renters' Credit by $34 million per year and a similar property tax refund for homeowners by $54 million per year. That's because Minnesota's property tax refund formulas include an exemption for seniors, people living with disabilities, and family dependents that is calculated based on a provision in federal law that has been repealed.

More Information

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


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