How Property Taxes Affect Renters in 2025

Renters don’t directly pay property taxes, but landlords often include these costs in the rent. Depending on the location, some states provide renter tax credits or refunds to lower state tax liability. On average, these credits can vary, and eligibility may depend on factors like homeownership rates, local data, or even the quarter in which you apply. 

If you’re a renter, you might think property taxes are a problem only for the likes of homeowners and landlords. You don’t get an annual property tax bill, after all, so you’ve probably never worried much about tax rates or how your local government collects revenue.

However, higher property taxes have an impact on the rental market, and that affects your wallet even if your name isn’t on the deed.

Beyond the baiting headlines about rising home prices and higher property values, it’s important to recognize that these factors can all crank up property tax rates. This creates an increased financial burden for everyone, including local residents who rent instead of own.

So, while property taxes seem like the property owner’s problem, renters do “pay” property taxes in their own way, often through higher rent and rising housing costs. As property values rise, it places more pressure on landlords to cover a higher tax burden, which is often done by raising rent. 

You’re likely supporting community services, schools, and infrastructure without directly paying income taxes on your rent. But you’re still covering part of that cost. Fortunately, many states understand these implications for tenants and offer things like property tax refund programs, renter tax credits, and homestead credit options to offset some of that financial burden. Let’s break down how all this works. 

How Renters Indirectly Pay Property Taxes

Think of your rent as a pie that’s sliced and served to cover a handful of essentials. Landlords have to budget for everything, including repairs, insurance, utilities, and, yes, property taxes. In fact, property taxes often represent one of the largest pieces of that pie, especially in areas where property values have jumped or tax rates have recently increased. 

So, when a landlord pays more because of rising assessed values, your rent usually follows that curve.

This is a big reason why tenants sometimes see higher rent even when their own incomes or the overall supply of rental housing haven’t changed much. A higher property tax bill for the landlord can turn into a price hike in your monthly rent. In more commercial areas, this can even shift how business owners figure out what to charge tenants in shared spaces.

While it’s likely easier to just keep things out of sight and out of mind, paying your rent each month as it comes due, knowing how these costs are baked into your monthly payments helps you see the broader point. That is, renters are helping to fund local public services right alongside existing homeowners. 

Want to learn more about how property taxes work and what might be causing higher property tax rates? Be sure to check out our detailed guide (LINK - /property-taxes-explained) for a helpful breakdown on how cities assess, collect, and apply property tax income.

State Renter Credits and Refund Programs

Are you curious whether you can do anything about the dollars you’re spending on property taxes through your rent? In many states, you can. 

Housing affordability remains a key issue for local governments and state lawmakers, with property tax reform advocates pushing for more equity. 

Several states now offer relief for renters in the form of a renter tax credit, homestead credit, or property tax refund. 

Here’s a table showing several programs so you can compare the incentives (but remember, always check official state or university links for the most current rules):

These credits can work in several different ways. Some are deducted from your income taxes owed, while others might provide a direct payment or check if the credit exceeds your state tax bill. Some, like the Homestead Credit, target specific resident groups, like older adults, people with disabilities, or those living in higher-priced cities. 

The eligibility factors often include your income, the total rent you paid, whether you reside in a particular county, or if you’re a local resident living in an area with higher property values.

States adjust these programs often, so check with your state’s revenue agency or the State Department of Revenue. And if you think you might qualify for another exemption or credit (for example, because you’re a student or living in certain types of commercial or multi-family buildings), take the time to read our full guide on property tax exemptions (LINK - /property-tax-exemptions).

Federal Treatment of Renters

At the federal level, property taxes are most meaningful for property owners (either homeowners or businesses) who directly pay property taxes on owned real estate. Renters can’t claim a direct federal property tax deduction for rent payments. The IRS and its resources like Publication 530 make it clear: only property owners who spend money directly on real estate taxes get this line item.

However, not all is lost if you’re a renter. For example, if you install energy-saving equipment in your apartment (with landlord approval), you could claim certain energy credits. Everyone still gets the standard deduction when filing income taxes, too, which can offset the overall cost of living. But there’s still no special property tax break for tenants at the federal level. 

How to Claim a State Renter Credit

If you live in a state with a renter tax credit or property tax refund program, don’t leave money sitting on the table! Here’s how to figure out if you qualify and claim your benefit:

1. Get a Certificate of Rent Paid (CRP): Your landlord should provide this, breaking down how much rent you paid for the year and how much covered property taxes. In places like Illinois, it’s a standard part of the process.
2. Get the Application or State Form: Each state has their own system. For example, Minnesota uses Form M1PR. The form will ask about your annual rent, household income, and sometimes the value of the building where you live.
3. File With Your State Return: Submit your form electronically or on paper with your state income tax return. Tax software (like FileTax.com) often walks you through each step, helping you claim all eligible credits and offsets.

Double-check your information, as errors can delay payment or reduce your claim. If you have questions, many state agencies and local governments post clear instructions online (or you can contact them by phone).

Offset Rising Housing Costs as a Renter

While renters don’t usually qualify for property tax deductions on their federal taxes, it’s important to know that higher property taxes and property values make it even more important for you to understand what other rights and eligibility you might have. 

Valuable advice: Business owners who work from home can write off a portion of their rent using a home office deduction. In addition, those owners operating an S-Corp., can reimburse themselves for a portion of their rent. The reimbursement is income for the owner but also a write-off for the S-Corp. As with every tax matter, good documentation is key. For further information and proper implementation, consult one of FileTax's tax advisors.

Don’t assume you have to eat every rent increase. Review your state’s website, look for property tax credits, and check your eligibility each and every tax season. It’s one way to offset the cost, keep more money in your pocket, and get some equity back from a system that collects billions every year from people…renters and homeowners alike. 

💡 File your taxes with confidence. FileTax.com automatically applies property tax deductions, SALT credits, and renter relief programs when you file online.