A free option that is great for self -assured files
Cash app -taxes
Best Tax Authorities Service for Freelancers, GIG employees and some owners
Tax
Homeowners can benefit from some great benefits this tax season. By specifying subtractions for real estate tax and mortgage interest rate, owners of real estate usually qualify for IRS tax benefits that others cannot claim.
What about tenants? Do not expect much tax reduction if you hand over part of cash every month to your landlord.
Tax software deals of the week
Deals are selected by the CNET Group Commerce team and cannot be related to this article.
This story is part of Taxes 2025Cnet’s coverage of the best tax software, tax tips and everything else you need to submit your tax return and keep track of your repayment.
Although most tenants are not eligible for tax benefits, there are some rental credits, depending on where you live, your income, your age and some other factors. If you are eligible for the credit of a tenant, this may not be a overwhelming amount of savings, but every dollar counts in today’s expensive market.
This is what you need to know when you rent your house.
Was tenants eligible for a federal tax credit?
At the federal level, the IRS does not offer a universal tax incentive for all tenants.
The foreign housing allowance is closest near a federal deduction that is available for tenants. So if you read this and do not live in the US, that’s good news.
“Independent American taxpayers who live abroad who are eligible for the income exclusion of foreign income earned, can be eligible to deduct part of their housing costs, including rent, made while they live in a foreign country,” said Logan Allec, CPA and owner of choice for the choice.
But that does not apply to many people. According to the inhabitant of the Association of Americans, around 5.5 million Americans live abroad.
Can tenants take the deduction of the home office?
If you run a company and use part of your rental areas as a place for business, you can see if you are eligible for the deduction of the home office.
“If a tenant has a space in his house that he uses regularly and exclusively for his company, they can deduct part of their annual rental costs through the deduction of the home office,” said Allec.
“Only” is the critical part there. You cannot call your kitchen a home office just because you have set up your laptop on the counter in the morning. Usually W-2 external employees will not be eligible for the deduction.
Offer a tax deduction, credits or discounts?
Although there may not be much that you can do on your federal taxes to compensate for your rental payments, your tax return of the State may differ. According to Intuit, the tax benefits of the state are available in almost half of the country.
Here is an overview of where renting comes with a number of potential tax benefits:
- Arizona
- California
- Colorado
- Connecticut
- Hawaii
- Indiana
- Iowa
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Missouri
- Montana
- New Jersey
- New Mexico
- New York
- North Dakota
- Pennsylvania
- Rhode Island
- Utah
- Vermont
- Washington, DC
- Wisconsin
How can you qualify for tax reduction as a tenant?
Even if your state offers the benefit, not all tenants are eligible for the deduction or credit of a tenant. The specific qualifications are often based on income or age, and they vary depending on the state, according to Allec.
In some places your income must be extremely low to qualify. In New York, for example, you cannot earn more than $ 18,000. Other state programs are aimed at seniors. In Montana, for example, tenants must be at least 62 years old to be eligible.
Some states have more mild requirements. In Indiana, each tenant can deduct a maximum of $ 3,000 (or the actual amount of the rent paid in the year, depending on less), regardless of age or annual income.
How much is the tax credit of a tenant worth?
Some states offer generous tax credits to tenants, such as Pennsylvania and Minnesota, while others are remarkably low.
California, one of the most expensive states in the country, offers a tenant credit of only $ 60 for private individuals and a maximum of $ 120 for couples who jointly submit. That is not worth much if you rent a place in San Francisco, where the average monthly tab according to Rentcafe is more than $ 3,300.
How do you claim the tax credit of a tenant on your state declaration?
Depending on where you live, will benefit from the tax credit, deduction or discount of your state for renting are different.
In California, for example, you claim the credit when submitting your return of your state. In other states, however, you may have to submit an application to the Department of Revenue. Keep in mind that the deadlines of the application may not follow the federal tax deaths. In Connecticut, for example, tenants request the credit between 1 April and 30 September.
View the tax statement of CNet Money and Tax Software Assessments to prepare for the tax return of 2024.
