Why this article is important: The renter’s tax credit will increase significantly beginning for tax year 2026.
Renter tax credits
Beginning in the 2026 tax year, the renter’s tax credit is increased. Tax credits are deducted to reduce the amount of the taxpayer’s state income taxes due for the year. [Calif. Revenue and Taxation Code §17053.5(a)(1)]
The principal behind the renter’s tax credit is renters are indirectly paying their landlord’s property taxes (through rent payments equal to one-to-two months’ rent), which for the landlord are tax deductible as operating expenses.
To qualify, the renter needs an adjusted gross income (AGI) of:
- $50,000 or less for joint filers; or
- $25,000 or less for individuals. [Rev & T C §17053.5(a)(1)(A)]
The renter’s tax credit equals:
- $250 for joint filers and individuals with no dependents; and
- $500 for joint filers and individuals with one or more dependents. [Rev & T C §§17053.5(a)(1)(A)(ii); 17053.5(a)(1)(B)(ii)]
For tax years prior to 2026, the renter’s tax credit is $120 for joint filers and $60 for individuals, regardless of the number of dependents. [Rev & T C §§17053.5(a)(1)(A)(i); (a)(1)(B)(i)]
To qualify, the renter must be a state resident and must have rented and occupied a property in the state for at least 50% of the calendar year for state tax reporting. [Rev & T C §§17053.5(c)]
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