What is a renter’s tax credit?
Rent isn’t affordable. A tax credit could help.
We’ve got to make Connecticut more affordable for working class people.
Connecticut is in a housing crisis. Rent keeps increasing, and salaries aren’t keeping up. Working class and middle class people are spending so much on rent that they are struggling to save for the future or for the down payment on a house. People are being pushed out of their neighborhoods, children have to switch schools, and families are moving farther from their support systems. Some people are being priced out of the state completely.
In Connecticut, half of renters and nearly one in three homeowners are considered “cost burdened” by the cost of housing. About one in six renters spend half of their income on housing. People are struggling. Connecticut’s legislators need to take action.
Could a renter’s tax credit help people in Connecticut?
What is a renter’s tax credit?
It's outrageous that housing is so expensive in Connecticut that even hard-working people struggle to afford a place to call home here. A renter’s tax credit is one way to start changing that.
A renter’s tax credit puts money back in renters’ pockets. It’s a way of acknowledging that renters are important contributors to our communities. It’s also about fairness: currently in Connecticut, homeowners can get tax breaks, and most renters can’t.
The Connecticut Renter’s Tax Credit would:
- be refundable
- be for all renters making up to $75,000 per year (working class people)
- be based on how much someone pays in rent and how much they make each year, with the credit capped at $2,500 per household
- include protections to prevent landlords from knowing how much renters get back.
A renter’s tax credit puts money back in people’s pockets to help manage the high cost of rent. Currently in Connecticut, tenants are being forced to take on their landlord’s property taxes, because those costs are passed on to them – it’s estimated that 20% of people’s rent goes toward their landlords’ property taxes, according to the Connecticut Department of Revenue Services. A renter’s tax credit makes things fairer by giving renters some relief.
Renters matter
Renters are a growing population in Connecticut. One in three people in Connecticut rent, according to the Census. Renters are a growing share of our lawmakers’ constituents. Connecticut’s legislators need to listen and respect the voices and struggles of renters trying to get by – not just the landlords and corporations who profit off of them.
Renters live in every corner of the state, in every legislative district, and in every age group. They are our neighbors, teachers, healthcare workers, firefighters, friends, and family. Meanwhile, Connecticut has 73,000 unfilled jobs, and the high cost of housing is making it hard for people to be able to work and live here.
It’s outrageous that even hard-working people who serve our communities are getting priced out of our towns. Our communities are our culture. When people who live here are forced out, our cities and towns lose their charm and economies suffer. It’s unfair that people who work hard are being priced out of the communities they love as landlords keep increasing rent.
Meanwhile, with more money going toward rent, people who want to buy a home are having a harder time saving for one when rent keeps rising, making the dream of homeownership become more out of reach and forcing people to continue renting when they don’t want to.
It’s about fairness.
The housing crisis is complicated, and greedy out-of-state landlords often hike rent for no reason. Landlords make money off the properties they own, and the cost of maintaining them is passed along to renters through what they pay in rent. Out-of-state corporate landlords can get tax benefits for owning properties, but not the renters who live in those apartments and homes. Connecticut should be helping and supporting the people who live here, keep our local economies and communities running, and are struggling with rising rents.
It’s estimated that 20% of what people pay in rent is paying for their landlord’s property taxes, according to the Connecticut Department of Revenue Services. However, homeowners can qualify for tax credits. Most Connecticut renters currently can’t.
Connecticut needs a tax system that is fair to renters.
Other states are trying it
Minnesota launched its renter’s tax credit starting with 2024 taxes. The refundable credit is part of the state’s individual income tax return.
In Minnesota, you can qualify if your household income is less than $75,390 a year (before taxes) and you aren’t claimed as a dependent on another person’s taxes. The maximum credit a renter can receive is $2,640 a year.
In Minnesota’s system, there are ways for renters to increase how much they get back. They can receive a higher credit if they have dependents, are over the age of 65, or have a disability. Renters can still claim the credit if they don’t make enough money to be required to pay taxes. However, they have to file their taxes to get the credit.Landlords also don’t know how much renters get from the tax credit. This prevents them from hiking rent to take the money meant to help tenants. In Minnesota, the introduction of the tax credit didn’t lead to landlords increasing rent in response.
The goal is that the credit will help offset the cost of rent by giving renters the same opportunity to access tax credits as landlords.
Minnesota is also not the only one. Two of our fellow New England states (Maine and Vermont), along with Wisconsin, Michigan, and Washington, D.C., also have renter’s tax credits.
Renters need relief
The government considers rent “affordable” if it costs less than 30% of your monthly pay, before taxes. But many people are paying more than that. When you pay more for rent, it leaves little left over for groceries, utilities, healthcare, and other essentials. If you don’t want to rent forever, it’s impossible to save to buy a house.
Rising rent prices are also pushing working class people out of their homes, school districts, and towns. Adult children can’t afford to move out, and their parents can’t afford to have them leave, either.
Our people are our community’s charm. When people are pushed out, we lose what makes Connecticut special.
A woman who lives in northeastern Connecticut told us that seven years ago, she was able to rent a two-bedroom apartment for $800 a month, and didn’t pay more than $200 in utilities. Now, the rising cost of housing and utilities forced her to move back in with family because she can’t find a place she can afford.
“Housing costs and food costs need to lower, or we will have no chance,” she told us.
The Connecticut legislature can act now
The Connecticut Project Action Fund is advocating for the state legislature to pass a law that creates a meaningful renter’s tax credit for working class people. The tax credit needs to:
- Provide renters who make up to $75,000 with up to $2,500 in annual tax credits
- Put working Connecticut families first, not corporate landlords
- Treat renters fairly
Doing so would help hundreds of thousands of renters around the state – including teachers, firefighters, healthcare workers, seniors, and young people just starting out – who are struggling to afford our expensive state.
Join us to take action to tell lawmakers to pass a renter’s tax credit.
