Dollar for dollar, no single program does more to reduce the regressivity of Minnesota’s state and local tax system than the renters’ property tax refund (PTR). A previous Minnesota 2020 analysis demonstrated the effectiveness of the renters’ PTR in reducing the regressivity of rental property taxes. The renter’s PTR successfully cuts the degree of rental property taxes in half, to the point where it is more in line with other categories of property taxes.
The renters’ PTR accomplishes this by targeting property tax relief to low-income renters. To receive a PTR payment, the portion of a taxpayer’s rent attributable to property taxes must exceed a specified percentage of income. The PTR payment equals a specified percentage (referred to as the co-pay) of the rent attributable to property taxes in excess of the income thresholds, up to a specified maximum payment. The Minnesota Department of Revenue website contains a table showing the renters’ PTR income threshold, co-pays, and maximums for various income levels for refunds filed in 2013 and paid in fiscal year 2014.
The map below shows the average 2011 renters’ PTR payment in each of the 87 Minnesota counties. Data shown in this map is based on Minnesota Revenue Department data as featured in a recent Minnesota Budget Project report, “Who Receives the Renters’ Credit.”
The largest renters’ PTR payments tend to be concentrated in or near the Twin Cities metropolitan area, where rental property taxes tend to be the highest. By definition, these payments are going to low-income renters who can use the dollars provided by this tax relief to pay for basic necessities that they could not otherwise afford.
This post contains the first of three maps that Minnesota 2020 Hindsight will feature this week highlighting various aspects of the renters’ property tax refund.