An estimated 2.4 million Californians could see a boost in their tax refunds next year under a legislative proposal that would dramatically increase the state’s renters’ tax credit for the first time in more than four decades.
The amount of the subsidy — created to help income-eligible Californians who don’t benefit from the tax breaks given to homeowners — has remained unchanged since 1979, never adjusted for inflation and no match for the relentless rise in rental rates across the state.
About The Renter Tax Credit
Renters earning less than $43,533 a year are eligible for a $60 tax credit, and renters earning less than $87,066 a year who are married and file taxes jointly are eligible for $120.
A bill proposed by state Sen. Steve Glazer (D-Orinda) would increase those rent credits to $500 for single filers and $1,000 for both joint filers and single filers with dependents. The bill, which will be heard by the Senate Appropriations Committee this month, would also make the credit refundable, potentially triggering a significant increase in refunds next year.
California’s current renters’ model is nonrefundable, which means that it can lower a taxpayers’ debt owed to the government but can’t be added as extra cash to a refund. That rarely benefits California’s lowest rent earners, who often have no tax liabilities, thanks to other exemptions and the state’s progressive income tax structure that depends heavily on those who earn the most.
Contact RPM Central Valley
For more information about the rental market in California, or to speak with us about our property management services, contact us today by calling (209) 572-2222 or click here.