S. 968: Rent Relief Act of 2025

This bill, known as the Rent Relief Act of 2025, aims to provide a tax credit for individuals who pay rent on their principal residence. Here’s a breakdown of the main provisions of the bill:

Key Provisions

1. Credit for Rent Paid

The bill establishes a refundable tax credit for individuals who lease their principal residence and whose rent exceeds 30% of their gross income for the taxable year. The credit is calculated on the excess amount of rent paid over the 30% threshold.

2. Limitations on the Credit

The credit cannot exceed the rent paid in excess of what the Department of Housing and Urban Development (HUD) has determined to be the fair market rent for small areas, specifically capped at 100% of that amount, which includes utility costs.

3. Calculating the Applicable Percentage

The percentage of the credit available is determined by the taxpayer’s income level:

• If gross income is not over $25,000, the percentage is 100%.
• If gross income is over $25,000 but not over $50,000, the percentage is 75%.
• If gross income is over $50,000 but not over $75,000, the percentage is 50%.
• If gross income is over $75,000 but not over $100,000, the percentage is 25%.
• If gross income is over $100,000, the percentage is 0%.

4. High-Cost Area Adjustments

In areas designated as high-cost areas by HUD, the income thresholds for the applicable percentage are increased by $25,000. This means individuals in high-cost areas can qualify for higher credit amounts based on their income.

5. Special Rules

For individuals residing in government-subsidized housing, a different calculation applies. Instead of the standard credit for rent paid, these individuals may receive a credit equivalent to one-twelfth of the rent they pay that is not subsidized under any program.

6. Advance Payment of Credit

The bill establishes a system for allowing advance payments of the credit on a monthly basis. Taxpayers who are eligible for the credit can receive monthly advance payments based on their anticipated credit amount for the year.

The Internal Revenue Service (IRS) is required to set up this advance payment program within six months of the bill's enactment.

7. Notifications

The IRS will be responsible for informing eligible taxpayers about the availability of the credit and the advance payment option.

8. Administrative Provisions

The bill allows the Secretary of the Treasury to create necessary regulations and guidance to implement these provisions effectively.

9. Effective Date

The measures outlined in the bill will apply to taxable years starting after December 31, 2025.

Relevant Companies

None found.