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Who receives the Renters' Credit? (TY 2016)

Feb 2020

Like all Minnesotans, Minnesota’s renters want safe, affordable homes for themselves and their families. But some Minnesotans earning low wages or on fixed incomes struggle to afford the cost of housing and other basic necessities. By providing property tax refunds to qualifying homeowners and renters, the state of Minnesota helps bring down one of the costs of housing and creates a more equitable tax system overall.

The property tax refund for renters is often called the Renters’ Credit.[1] The Renters’ Credit provides a tax refund to low- and moderate-income renters whose property taxes are considered high for their income level. The Renters’ Credit refunds a portion of the property taxes that renters have paid through their rents. Qualifying households had incomes of $59,960 or less; the credit is particularly targeted to the state’s lowest-income households, and a substantial majority of households receiving the credit have incomes of about $30,500 or less.

For the 2016 tax year, about 325,000 Minnesota households received the Renters’ Credit, and the average amount of credit received was $653.[2] Twenty-nine percent of the households receiving the Renters’ Credit included senior citizens and/or people living with disabilities; they received a larger average credit of $723. The share of participating households that include seniors or people living with disabilities tends to be higher in Greater Minnesota. In fact, in 13 Greater Minnesota counties, at least one-half of participating households included seniors and/or persons living with disabilities.[3]

Minnesotans in every county receive the Renters’ Credit. The full version of this issue brief includes a table of data on the impact of the Renters’ Credit in each Minnesota county and for the state as a whole.

By Nan Madden and Abimael Chavez-Hernandez
[1] The official name of the property tax refund for homeowners is the Homestead Credit Refund.
[2] The data in this issue brief comes from Minnesota Department of Revenue, Property Tax Research Unit, and represent property tax refund claims filed in 2017 for tax year 2016, the most current year for which detailed data are available.
[3] The starting point for calculating the Renters’ Credit is a percentage of the rent paid, which is considered the renter’s share of property taxes. Starting with refunds filed in 2012, this percentage of rent decreased from 19 percent to 17 percent, and it is still 17 percent today. In 2013, policymakers increased the maximum refund amount and reduced the “threshold.” The threshold is the percentage of income a household must pay in property taxes in order to qualify for a refund, which also affects the size of their refund. In the 2014 Legislative Session, policymakers approved an additional one-time 6 percent increase for Renters’ Credits received in 2014 only.