Even as rents have skyrocketed, the credit remains stuck where it was when Jimmy Carter was president: $60 for individuals and $120 for couples. Senate Bill 843, which I authored with more than 50 other members from both parties, would change that.
SB843 would increase the renter’s tax credit and expand access to it. The increased credit would allow individuals to receive $500, while couples and individuals with dependents would get $1,000. That means single parents – who usually need more than one bedroom to house their children – will get just as much as a couple.
In addition, Californians would be eligible for the full credit even if that amount exceeded their income tax liability, since most people also pay sales taxes, utility taxes and other levies. This change would expand access to about one million low-income residents – those who need the help the most.
The renter’s tax credit was enacted in 1972 to assist Californians with rent costs. It was increased to $60 for individuals and $120 for couples in 1979, when the statewide average rent was only $862 (adjusted to 2020 dollars).
Drastic rent hikes
The average statewide rent was $1,614 in 2020, and it has only increased since. In dense urban areas, the rent hikes are far more drastic. Inflation is also forcing Californians to spend more on groceries, gasoline, childcare and more. An increased and expanded tax credit could help many struggling renters not only pay for rent, but other essentials as well.
The COVID-19 pandemic has only worsened the problems renters face. Due to the economic barriers to owning a home, renters are disproportionately more likely to be low income and were more likely to lose their jobs during stay-at-home orders. Simply put, homeowners typically have more financial stability than renters and receive numerous tax benefits from the state and federal government.
SB843 will also begin to balance the tax benefits California provides to renters compared to homeowners. This year alone, it is estimated that homeowners will receive $9.3 billion through the three largest tax breaks: the mortgage interest deduction, property tax deduction and partial exclusion of capital gains taxes on the sale of a principal residence. By comparison, renters will receive only $160 million through the current renter’s tax credit.
With almost half of our state’s residents being renters, there are steep inequalities between the aid available to homeowners vs. renters. This bill will take important steps in narrowing these inequities to assure renters have a safety net to rely on as well.
California is long overdue to increase and expand the renter’s tax credit. I am proud to support our state’s renters with SB843.
Steve Glazer is the California State Senator representing the 7th Senate District. If you have questions about this or other topics, you can reach out to him at sd07.senate.ca.gov.