Rent-burdened tenants with a household income of less than $125,000 will be eligible for tax credits, if a new federal bill proposed by Joseph Crowley, chairman of the Democratic Caucus and Queens County Democratic Party, is signed into law.
The Rent Relief Act would make individuals across the country with a household income of less than $125,000 whose primary residence is rental housing, and who pay more than 30 percent of their income in rent, eligible for one of two kinds of tax credits.
The first would be a refundable tax credit for those living in non-subsidized housing within the fair market value for rentals. The size of the credit would be determined by taking into account the household’s annual income, the total amount spent annually on rent, and a stimulated rate of the federal government’s established fair market annual rent caps.
The second would be available for individuals who live in government-subsidized rental housing like Section 8 or NYCHA, and allow them to claim the value of one month’s rent as a refundable tax credit. Rent for individuals living in subsidized housing is typically capped at 30 percent of a household’s income, making it nearly impossible for those tenants to qualify for existing tax credits.
Across the country, 111 million Americans live in rental housing. In New York, that number is twice the national average with two-thirds of residents claiming a primary residence in rental housing.
“Unfortunately, the demand for rental housing continues to outpace supply, and while all signs point to higher rents in the future, wages remain stagnant,” said Chairman Crowley. “Just as the tax code has helped make home ownership more affordable, I believe Congress must provide relief to the growing number of renters who are feeling squeezed financially.”
Crowley’s bill is already backed by New York State Assemblyman Brian Barnwell, and New York City Council Majority Leader Jimmy Van Bramer. The congressman will formally introduce the bill tomorrow during Congress’s pro forma session. If approved, the federal legislation would be funded through a budget appropriations allocation. The anticipated total cost for the tax credit has not yet been determined.
The bill comes at a time where rents in New York City and elsewhere are outpacing income growth. A report from listings website StreetEasy found that between 2010 and 2017, rent prices have increased twice as fact as wages in New York City. This is particularly true for low-income New Yorkers, who in that time period saw their wages increase the least and rents for the bottom fifth tier of the market increase the most, 4.9 percent annually since 2010.
“With stagnant pay and rising rents, New Yorkers are finding it more difficult to make it from month to month,” said Van Bramer. “This tax credit would be life changing for millions of New Yorkers. Combined with continued efforts to preserve and expand affordable and public housing, the Rent Relief Act tax credit would help keep New York City a vibrant and inclusive place for all New Yorkers.”