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.
Like all Minnesotans, Minnesota’s renters want safe, affordable homes for themselves and their families. But some folks 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.
The property tax refund for renters is often called the Renters’ Credit. It is a tax refund for 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. The credit is particularly targeted to the state’s lowest-income households; over 60 percent of households receiving the credit have incomes of $40,000 or less.[1] The maximum household income to qualify for the Renters’ Credit for the 2021 tax year was $64,920.[2]
For the 2021 tax year, more than 295,000 Minnesota households received the Renters’ Credit, and the average amount of credit received was $731.[3] Thirty percent of the households receiving the Renters’ Credit included senior citizens and/or people living with disabilities; they received a larger average credit of $861. As in previous years, the share of participating households that include seniors or people living with disabilities tends to be higher in Greater Minnesota. In fact, in 18 Greater Minnesota counties, at least half of the participating households included seniors and/or persons living with disabilities.[4]
The Renters’ Credit helps advance racial equity. In Minnesota, people of color are more likely to be earning lower incomes and more likely to be renters. In 2021, the Minnesota homeownership rate was 73 percent, but the gap between people of color and white Minnesotans is unacceptably wide. Homeownership rates were about 50 percent for Indigenous Minnesotans, 66 percent for Asian Minnesotans, 31 percent for Black Minnesotans, 57 percent for Hispanic Minnesotans, 56 percent for Minnesotans who identify as another race, and 60 percent for Minnesotans of two or more races.[5] This reflects current barriers to wealth-building and a history of policies that excluded African Americans and other people of color from homeownership.[6]
By Nan Madden and Haleigh Sinclair
[1] Minnesota Department of Revenue, Property Tax Research Unit.
[2] Minnesota Department of Revenue, 2021 Homestead Credit Refund (for Homeowners) and Renter’s Property Tax Refund Forms and Instructions.
[3] Except where otherwise noted, the data in this issue brief come from Minnesota Department of Revenue, Property Tax Research Unit, and represent property tax refund claims filed in 2022 for tax year 2021.
[4] 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.
[5] Wilder Foundation, Minnesota Compass, Homeownership Gap Data for 2021.
[6] Learn more from the University of Minnesota Mapping Prejudice Project, What is a Covenant?