Bill Summary
The "Tax Relief for Renters Act of 2026" aims to provide tax relief for individuals by allowing a deduction for rent payments made on their primary residence. Under this legislation, taxpayers can deduct an amount equivalent to one-twelfth of their qualified rent expenses for the taxable year, up to a maximum of $4,000. However, this deduction is subject to income limitations, which means individuals with an adjusted gross income exceeding specified thresholds (ranging from $75,000 to $125,000 depending on filing status) will not qualify for the deduction.
The bill also includes provisions for inflation adjustments starting in 2028, ensuring that the dollar limits for deductions are adjusted annually based on cost-of-living increases. Additionally, the deduction is available to non-itemizers, making it accessible to a broader range of taxpayers. The new provisions will take effect for taxable years beginning after December 31, 2026.
Possible Impacts
The "Tax Relief for Renters Act of 2026" provides a rent deduction that could have several impacts on individuals and families. Here are three examples of how this legislation could affect people:
1. **Financial Relief for Renters**: Individuals who pay rent for their primary residence could benefit from a tax deduction of up to $4,000. This deduction could reduce their taxable income, leading to lower overall tax liability and potentially increasing their disposable income. For example, a family that pays $2,000 in monthly rent could deduct $4,000 from their income, which might ease financial strain and allow for greater spending on necessities or savings.
2. **Encouragement of Affordable Housing Options**: By providing a tax deduction for rent, the legislation could incentivize landlords to offer more affordable rental options. If renters have access to tax relief, landlords might be encouraged to keep rents lower to attract tenants who are looking to maximize their deductions. This could potentially lead to more affordable housing markets in areas where rental costs are high.
3. **Limitations Based on Income**: The income limitations outlined in the bill mean that high-income individuals will not benefit from the rent deduction. For instance, a single individual earning $80,000 or more would be ineligible for the deduction, which may disproportionately affect middle-class renters. This could create a scenario where lower- and middle-income renters gain some relief, while higher-income individuals continue to face the full burden of rental costs without any tax benefits. As a result, the legislation could help narrow the financial gap for some renters, but it may also reinforce economic inequalities among different income brackets.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7768 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 7768
To amend the Internal Revenue Code of 1986 to establish a deduction for
certain amounts paid for rent for a primary residence.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 3, 2026
Mr. Landsman (for himself and Mr. Kean) introduced the following bill;
which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish a deduction for
certain amounts paid for rent for a primary residence.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tax Relief for Renters Act of
2026''.
SEC. 2. DEDUCTION FOR RENT PAYMENTS.
(a) In General.--
(1) Deduction allowed.--Part VII of subchapter B of chapter
1 of the Internal Revenue Code of 1986 is amended by
redesignating section 226 as section 227 and by inserting after
section 225 the following new section:
``SEC. 226. RENT PAYMENTS.
``(a) In General.--There shall be allowed as a deduction an amount
equal to \1/12\ the qualified rent expenses of the taxpayer for the
taxable year.
``(b) Qualified Rent Expenses.--For purposes of this section, the
term `qualified rent expenses' means, with respect to a taxable year,
amounts paid or incurred to lease the primary residence of the taxpayer
during the taxable year.
``(c) Limitations.--
``(1) In general.--The deduction allowed under subsection
(a) shall not exceed $4,000 for any individual in any taxable
year.
``(2) Income limitation.--
``(A) In general.--No deduction shall be allowed
under subsection (a) in the case of an individual whose
adjusted gross income for the taxable year exceeds the
threshold amount.
``(B) Threshold amount.--For purposes of this
paragraph, the term `threshold amount' means--
``(i) in the case of a joint return or a
surviving spouse, $125,000,
``(ii) in the case of married filing
separately, $85,000,
``(iii) in the case of a head of household,
$80,000, or
``(iv) in the case of any other individual,
$75,000.
``(d) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2027, each of the dollar amounts in subsection
(c) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2026' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--If any increase under paragraph (1) is not
a multiple of $100, such increase shall be rounded to the
nearest multiple of $100.''.
(2) Conforming amendment.--The table of sections for part
VII of subchapter B of chapter 1 of such Code is amended by
redesignating the item relating to section 224 as relating to
section 225 and by inserting after the item relating to section
225 the following new item:
``Sec. 226. Rent payments.''.
(b) Deduction Allowed to Non-Itemizers.--Section 63(b) of such Code
is amended by striking ``and'' at the end of paragraph (6), by striking
the period at the end of paragraph (7) and inserting ``and'', and by
adding at the end the following new paragraph:
``(8) the deduction provided in section 226.''.
(c) Non-Application of Certain Limitations for Itemizers.--
(1) Deduction not treated as a miscellaneous itemized
deduction.--Section 67(b) of such Code is amended by striking
``and'' at the end of paragraph (12), by striking the period at
the end of paragraph (13) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(14) the deduction under section 226 (relating to rent
payments).''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
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