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 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 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.

Protecting the Renters' Credit - as well as related property tax refunds for homeowners - is an important issue as Minnesota policymakers consider how to update the state's tax code in response to the 2017 federal tax bill. If the state acts to simply update the tax code to conform to federal tax changes, that could cut Property Tax Refunds for renters by $34 million per year 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people with disabilities, and family dependents that is calculated based on a provision in federal law that has been repealed.

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

No changes - positive or negative - to the Renters' Credit were enacted in the 2018 Legislative Session.

Governor Mark Dayton's tax proposal and the final tax bill passed by the Legislature (House File 947) both contained provisions to update Minnesota's tax code to maintain the existing Renters' Credit exemption amounts for seniors, people with disabilities, and families with dependents.

The 2018 Legislative Session ended without the Legislature and Dayton reaching a compromise on tax legislation, and no major tax legislation was enacted into law. The state does not automatically conform to federal changes; as a result, we believe that the Renters' Credit and property tax refund for homeowners will continue to provide the same exemptions and refund amounts to seniors, people with disabilities, and families.

More Information

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

Donate

With your support, we will continue to work towards a future where all Minnesotans have access to opportunity and economic well-being.

Donate Now »