Taxation: renter’s credit.

Plain English Breakdown

The bill's effectiveness depends on funding being authorized in a Budget Act bill.

Renter's Credit Expansion

AB-838 expands eligibility for the renter’s tax credit and increases its amount, making it available to higher income levels and providing more financial relief to renters.

What This Bill Does

• Extends the renter’s tax credit to individuals with an adjusted gross income up to $75,000 and joint filers, heads of household, or surviving spouses with an adjusted gross income up to $150,000.
• Increases the credit amount from $60 for individuals to $1,000 and from $120 for joint filers, heads of household, or surviving spouses to $2,000.
• Requires the Franchise Tax Board to adjust these amounts and income limits for inflation each year.
• Makes the excess of the tax credit over the renter’s liability refundable if funding is provided by the Legislature.

Who It Names or Affects

• Renters who file taxes as joint filers, heads of household, or surviving spouses with an adjusted gross income up to $150,000.
• Individual renters with an adjusted gross income up to $75,000.

Terms To Know

Adjusted Gross Income

The total income you earn minus specific deductions allowed by the tax law before calculating your taxes.

Tax Credit

A reduction in the amount of tax owed to the government, which can be used to lower your tax bill or receive a refund if it exceeds your tax liability.

Limits and Unknowns

• The increased credit and expanded eligibility only apply for up to four taxable years after funding is first authorized.
• If not specified in a Budget Act bill, the original credit amounts and income limits will remain unchanged.

Official Summary Text

AB 838, as introduced, Ta.
Taxation: renter’s credit.
The Personal Income Tax Law authorizes various credits against the taxes imposed by that law, including a credit for qualified renters in the amount of $120 for spouses filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000, as adjusted, or less, and in the amount of $60 for other individuals if adjusted gross income is $25,000, as adjusted, or less. Existing law requires the Franchise Tax Board to annually adjust for inflation these adjusted gross income amounts. For 2024, the adjusted gross income limit is $52,421 and $104,842, respectively.
Existing law establishes the continuously appropriated Tax Relief and Refund Account in the General Fund and provides that payments required to be made to taxpayers or other persons from the Personal Income Tax Fund are to be paid from that account.
This bill, for taxable years beginning on or after January 1 of the taxable year that includes the date on which funding is first authorized for purposes of this bill and for the succeeding 4 taxable years, and only when specified in a bill relating to the Budget Act, would extend the above-described renter’s credit to spouses filing joint returns, heads of household, and surviving spouses if adjusted gross income is $150,000, as adjusted, or less, and for other individuals if adjusted gross income is $75,000, as adjusted, or less. The bill would also increase the credit amount for those years to $2,000 for spouses filing joint returns, heads of households, and surviving spouses and $1,000 for other individuals. In the event the increased credit amount is not specified in a bill relating to the Budget Act, the existing credit amounts and adjusted gross income limits, as described above, would be the credit amounts and adjusted gross income limits for that taxable year.
The bill would require the Franchise Tax Board to annually recompute the credit amount and the increased adjusted gross income limits for inflation for taxable years following the first year in which the increased credit is operative, except as provided.
The bill, for credits allowable for taxable years in which the above-described increased credit is operative, would provide that the credit amount in excess of the qualified renter’s liability would be refundable and paid from the Tax Relief and Refund Account to the qualified renter upon appropriation by the Legislature.
Existing law requires any bill authorizing a new tax credit to contain, among other things, specific goals, purposes, and objectives that the tax credit will achieve, detailed performance indicators, and data collection requirements.
The bill would
provide findings and declarations relating to the goals, purposes, and objectives of this credit.
This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF