Refundable credit for rent paid for principal residence

(a)

In general

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:

36C.

Renter tax credit

(a)

In general

In the case of an individual who leases the individual’s principal residence (within the meaning of section 121) during the taxable year and who pays rent with respect to such residence in excess of 30 percent of the taxpayer’s adjusted gross income for such taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to the applicable percentage of such excess.(b)

Credit limited by 100 percent of small area fair market rent

Solely for purposes of determining the amount of the credit allowed under subsection (a) with respect to a residence for the taxable year, there shall not be taken into account rent in excess of an amount equal to 100 percent of the small area fair market rent (including the utility allowance) applicable to the residence involved (as most recently published, as of the beginning of the taxable year, by the Department of Housing and Urban Development).(c)

Definitions and special rules

For purposes of this section—(1)

Applicable percentage

The term applicable percentage means the percentage determined in accordance with the following table:The applicableIf the taxpayer’s adjusted gross income is:percentage is:Not over $25,000100 percentOver $25,000, but not over $50,00075 percentOver $50,000, but not over $75,00050 percentOver $75,000, but not over $100,00025 percentOver $100,0000 percent.

(2)

Partial year residence

The Secretary shall prescribe such rules as are necessary to carry out the purposes of this section for taxpayers with respect to whom a residence is a principal residence for only a portion of the taxable year.(3)

Rent

The term rent includes any amount paid for utilities of a type taken into account for purposes of determining the utility allowance under section 42(g)(2)(B)(ii).(4)

Married individuals filing separate returns

In the case of individuals who are married to each other, have the same principal residence, and do not file a joint return for the taxable year, the credit determined under this section with respect to each such individual shall be 50 percent of the amount of the credit which would be determined under this section if such individuals filed a joint return, unless such individuals agree on a different division of such credit (in such manner as the Secretary may provide) which does not aggregate to more 100 percent of such amount. (d)

Reconciliation of credit and advance payments

The amount of the credit allowed under this section for any taxable year shall be reduced (but not below zero) by the aggregate amount of any advance payments of such credit under section 7527B for such taxable year.

(b)

Advance payment

Chapter 77 of the Internal Revenue Code of 1986 is amended by inserting after section 7527A the following new section:

7527B.

Advance payment of renter tax credit

(a)

In general

Not later than 6 months after the date of the enactment of the Rent Relief Act of 2023, the Secretary shall establish a program for making advance payments of the credit allowed under section 36C on a monthly basis to any taxpayer who—(1)the Secretary has determined will be allowed such credit for the taxable year, and(2)has made an election under subsection (c).(b)

Amount of advance payment

(1)

In general

For purposes of subsection (a), the amount of the monthly advance payment of the credit provided to a taxpayer during the applicable period shall be equal to the lesser of—(A)an amount equal to—(i)the amount of the credit which the Secretary has determined will be allowed to such taxpayer under section 36C for the taxable year ending in such applicable period, divided by(ii)12, or(B)such other amount as is elected by the taxpayer.(2)

Applicable period

For purposes of this section, the term applicable period means the 12-month period from the month of July of the taxable year through the month of June of the subsequent taxable year.(c)

Election of advance payment

A taxpayer may elect to receive an advance payment of the credit allowed under section 36C for any taxable year by including such election on a timely filed return for the preceding taxable year.(d)

Internal Revenue Service notification

The Internal Revenue Service shall take such steps as may be appropriate to ensure that taxpayers who are eligible to receive the credit under section 36C are aware of the availability of the advance payment of such credit under this section.(e)

Regulations

The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes this section.

(c)

Clerical amendments

(1)

In general

The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following new item:

Sec. 36C. Renter tax credit.

(2)

Advance payment

The table of sections for chapter 77 of such Code is amended by inserting after the item relating to section 7527A the following new item:

Sec. 7527B. Advance payment of renter tax credit.

(d)

Effective date

The amendments made by this section shall apply with respect to taxable years beginning after December 31, 2023.(e)

Community outreach

Immediately upon the enactment of this Act, in addition to amounts otherwise available, there are appropriated out of any money in the Treasury not otherwise appropriated $50,000,000 to remain available until 5 years after the enactment of this Act for necessary expenses for the Internal Revenue Service to support efforts to increase enrollment of eligible households in the Renter Tax Credit allowed under section 36C of the Internal Revenue Code of 1986 (including the advance payment of such credit under section 7527B of such Code), including but not limited to program outreach, costs of data sharing arrangements, systems changes, forms changes, and related efforts, and efforts by Federal agencies to facilitate the cross-enrollment of beneficiaries of other programs in such Renter Tax Credit, including by establishing intergovernmental cooperative agreements with States and local governments, tribal governments, and possessions of the United States: Provided, that such amount shall be available in addition to any amounts otherwise available: Provided further, that these funds may be awarded by Federal agencies to State and local governments, tribal governments, and possessions of the United States, and private entities, including organizations dedicated to free tax return preparation.