Housing COST Act
- Sponsor
- Rep. Tran, Derek [D-CA-45]
- Committees
- Ways and Means Committee (primary)
- Last action
- Sep 24, 2026
Bottom line
The bill creates a refundable federal tax credit and an advance payment system to help eligible renters offset their housing costs, aiming to improve housing affordability for low- and middle-income households.
What it actually does
This bill establishes a new refundable tax credit for individuals who lease their principal residence, allowing them to claim an 'applicable percentage' of their rent paid, up to a maximum of $4,000 annually. The credit is subject to limitations based on adjusted gross income and small area fair market rent. It also mandates the creation of a program for monthly advance payments of this credit and requires a community outreach program to inform eligible taxpayers.
Proponents argue
Supporters would argue that this bill directly addresses the rising cost of housing by providing essential financial relief to renters, making housing more affordable for low- and middle-income individuals and families. The refundable nature and advance payments ensure that even those with little or no tax liability can benefit, providing crucial support for household budgets and stimulating local economies.
Opponents contend
Opponents might contend that while well-intentioned, this credit could inadvertently drive up rental prices by increasing demand without increasing supply, ultimately benefiting landlords more than tenants. Concerns could also be raised about the significant administrative complexity and potential for fraud associated with establishing a new refundable credit and a monthly advance payment system within the Internal Revenue Service.
The bill is relatively short and its core provisions are clearly laid out, making it accessible for an informed reader to understand its main effects within a reasonable timeframe.
Section 2(a), new Section 36C(a) of the Internal Revenue Code of 1986.
Establishment of Refundable Renter Tax Credit
This provision creates a new refundable tax credit for individuals who lease their principal residence during the taxable year. The credit amount is an 'applicable percentage' of the rent paid, designed to reduce the tax burden for eligible renters or provide a refund if the credit exceeds their tax liability.
Supporters argue
Supporters argue this directly addresses housing affordability by putting money back into the pockets of renters, easing financial strain and improving their quality of life.
Critics contend
Critics might argue that while providing relief, it could also contribute to inflation in rental markets if not coupled with supply-side solutions, potentially diminishing the long-term benefit for renters.
Tradeoffs
This provision balances the immediate need for direct financial relief for renters against potential impacts on rental market dynamics and federal revenue.
Section 2(a), new Section 36C(b) of the Internal Revenue Code of 1986.
Limitations on Renter Tax Credit Amount
This section sets three key limits on the credit: a maximum annual credit of $4,000, a cap on eligible rent based on 100% of the small area fair market rent (SAFMR) applicable to the residence, and an adjusted gross income (AGI) threshold of $150,000 for the preceding taxable year, above which no credit is allowed.
Section 2(b), new Section 7527B of the Internal Revenue Code of 1986.
Establishment of Monthly Advance Payment Program
This provision directs the Secretary of the Treasury to establish a program for making monthly advance payments of the renter tax credit. Eligible taxpayers can elect to receive these payments, which are calculated as one-twelfth of their estimated annual credit, providing ongoing financial support throughout the year.
Section 2(e).
Community Outreach for Renter Tax Credit
This section mandates the Secretary of the Treasury to implement an outreach program to inform eligible taxpayers about the new renter tax credit and its advance payment option. The program includes data sharing, systems changes, forms changes, and intergovernmental cooperative agreements with state, local, and tribal governments, and private entities to facilitate cross-enrollment and awareness.
Section 2(a), new Section 36C(e) of the Internal Revenue Code of 1986.
Sunset Provision for Renter Tax Credit
This provision specifies that the renter tax credit will not be allowed for taxable years beginning after December 31, 2034, effectively setting a sunset date for the program. This means the credit is temporary and will expire unless reauthorized by Congress.
The definition of 'rent' for the purpose of calculating the tax credit 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)'.
Section 2(a), new Section 36C(c)(3).
Why it matters:This is standard legislative practice to define terms by reference to existing code sections to ensure consistency and avoid redundancy, rather than being intentionally obscured.
Case for: Supporters would argue that including utilities in the definition of rent accurately reflects the total housing cost burden for renters and ensures the credit provides more comprehensive relief, as utility costs are a significant component of housing expenses.
Case against: Critics might argue that this adds complexity to the calculation and verification process for both taxpayers and the IRS, potentially leading to disputes over what constitutes an eligible utility cost, and could be difficult for taxpayers to accurately track.
Estimated impact: This provision expands the base amount of 'rent' on which the credit is calculated for many renters, potentially increasing the total credit amount received by eligible individuals, especially those in areas with higher utility costs.