House tax bill boosts property tax refunds for renters and homeowners

The second major tax bill of the session is moving through the Minnesota House of Representatives this week, and it takes an important step forward for low- and moderate-income taxpayers.

The bill would boost the Renters’ Credit by 6 percent for this year only: more than 317,000 Minnesota households would see an additional $39 in their refunds. Homeowners would see a 3 percent increase in their property tax refunds. The increase would be done automatically – taxpayers wouldn’t need to submit anything in addition to the usual property tax refund forms or amend applications that have already been filed.

This provision was part of the House’s Property Tax and Local Division Report, House File 1884, authored by Representative Jim Davnie, and was based on House File 3142 (Representative Tim Faust) and House File 2929 (Representative Rick Hansen).

The Renters’ Credit provides a property tax refund to low- and moderate-income renters whose property taxes are high in relation to their incomes. The Renters’ Credit is effective in limiting how much of their incomes these Minnesotans pay in property taxes. When they receive their refunds, Minnesota renters are able to catch up on bills and purchase basics like medicine, food, and school supplies in their local communities.

The Renters’ Credit is important to Minnesotans all across the state. More than one-quarter of qualifying households include seniors or people with severe disabilities, who may struggle to get by on fixed incomes. In 14 Greater Minnesota counties, at least half of participating households include seniors and/or people with disabilities.

Even after the progress made toward tax fairness in last year’s tax bill, low- and moderate-income Minnesotans still pay a higher share of their incomes in state and local taxes than those with the highest incomes. The proposed increase in the Renters’ Credit is a good step to narrow that gap. While important improvements were made to the Renters’ Credit last year, we have not fully made up lost ground from 2011, when the Renters’ Credit was cut by 13 percent.

The omnibus tax bill, House File 3167, which contains the increase in the Renters’ Credit, is up for a floor vote as soon as tomorrow. The bill focuses on sales taxes, property taxes and local provisions; House File 1777, which passed earlier in March, focused on income tax conformity, the repeal of business-to-business sales taxes, and estate and gift taxes.

Haven’t filed for your property tax refund yet? You can find forms and instructions on the Department of Revenue’s website.

-Nan Madden

Note: Since this blog was originally published, the bill was amended on the House floor. The current version of the bill would boost the Renters’ Credit by 5 percent for this year only; more than 317,000 Minnesota households would see an additional $33 in their refunds on average. This is an increase of $10.4 million.

About Nan Madden

Nan Madden is director of the Minnesota Budget Project.
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