Rent Relief Act of 2022
Bill: S.4728 | Sponsor: Sen. Warnock, Raphael G. (D-GA)
Policy area: Taxation

Summary:
Rent Relief Act of 2022
This bill allows a refundable tax credit through 2024 for individuals who pay rent for a principal residence that exceeds 30% of their gross income for the taxable year.
The amount of the credit ranges from 25% to 100% of the excess rent, depending on the gross income of the taxpayer. The credit is not available for taxpayers with gross income that exceeds $100,000 ($125,000 for a taxpayer whose principal residence is located in a high-cost area, as defined by the bill). Rent that exceeds 100% of the small area fair market rent (including the utility allowance) for the residence may not be taken into account for the purpose of determining the amount of the credit.
For individuals who reside in government-subsidized housing, the bill allows a credit equal to 1/12th of the rent paid by the taxpayer (and not subsidized under the program) during the year with respect to the residence.
The Department of the Treasury must establish a program for making advance payments of the credit on a monthly basis.

To amend the Internal Revenue Code of 1986 to allow for a credit 
  against tax for rent paid on the personal residence of the taxpayer.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rent Relief Act of 2022''.

SEC. 2. REFUNDABLE CREDIT FOR RENT PAID FOR PRINCIPAL RESIDENCE.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. RENT PAID FOR PRINCIPAL RESIDENCE.

    ``(a) In General.--In the case of an individual who leases the 
individual's principal residence (within the meaning of section 121) 
during the taxable year and who pays rent with respect to such 
residence in excess of 30 percent of the taxpayer's gross income for 
such taxable year, there shall be allowed as a credit against the tax 
imposed by this subtitle for such taxable year an amount equal to the 
applicable percentage of such excess.
    ``(b) Credit Limited by 100 Percent of Small Area Fair Market 
Rent.--Solely for purposes of determining the amount of the credit 
allowed under subsection (a) with respect to a residence for the 
taxable year, there shall not be taken into account rent in excess of 
an amount equal to 100 percent of the small area fair market rent 
(including the utility allowance) applicable to the residence involved 
(as most recently published, as of the beginning of the taxable year, 
by the Department of Housing and Urban Development).
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable percentage.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable percentage shall be 
                determined in accordance with the following table:

                                                         The applicable
``If gross income is:                                    percentage is:
        Not over $25,000.............................      100 percent 
        Over $25,000, but not over $50,000...........       75 percent 
        Over $50,000, but not over $75,000...........       50 percent 
        Over $75,000, but not over $100,000..........       25 percent 
        Over $100,000................................        0 percent.

                    ``(B) High-cost areas.--In the case of an 
                individual whose principal residence is located in an 
                area designated by the Secretary of Housing and Urban 
                Development as an area which has high construction, 
                land, or utility costs relative to area median gross 
                income for purposes of section 42(d)(5), each of the 
                dollar amounts in the table contained in subparagraph 
                (A) shall be increased by $25,000.
            ``(2) Partial year residence.--The Secretary shall 
        prescribe such rules as are necessary to carry out the purposes 
        of this section for taxpayers with respect to whom a residence 
        is a principal residence for only a portion of the taxable 
        year.
            ``(3) Special rule for individuals residing in government-
        subsidized housing.--In the case of a principal residence--
                    ``(A) the rent with respect to which is subsidized 
                under a Federal, State, local, or tribal program, and
                    ``(B) with respect to which the taxpayer elects the 
                application of this paragraph,
        in lieu of the credit determined under subsection (a), there 
        shall be allowed as a credit against the tax imposed by this 
        subtitle for such taxable year an amount equal to \1/12\ of the 
        amount of rent paid by the taxpayer (and not subsidized under 
        any such program) during the taxable year with respect to such 
        residence.
            ``(4) Rent.--The term `rent' 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).
    ``(d) Reconciliation of Credit and Advance Payments.--The amount of 
the credit allowed under this section for any taxable year shall be 
reduced (but not below zero) by the aggregate amount of any advance 
payments of such credit under section 7527A for such taxable year.
    ``(e) Termination.--This section shall not apply to taxable years 
beginning after December 31, 2024.''.
    (b) Advance Payment.--Chapter 77 of the Internal Revenue Code of 
1986 is amended by inserting after section 7527 the following new 
section:

``SEC. 7527A. ADVANCE PAYMENT OF MIDDLE CLASS TAX CREDIT.

    ``(a) In General.--Not later than 6 months after the date of the 
enactment of the Rent Relief Act of 2022, the Secretary shall establish 
a program for making advance payments of the credit allowed under 
section 36C on a monthly basis to any taxpayer who--
            ``(1) the Secretary has determined will be allowed such 
        credit for the taxable year, and
            ``(2) has made an election under subsection (c).
    ``(b) Amount of Advance Payment.--
            ``(1) In general.--For purposes of subsection (a), the 
        amount of the monthly advance payment of the credit provided to 
        a taxpayer during the applicable period shall be equal to the 
        lesser of--
                    ``(A) an amount equal to--
                            ``(i) the amount of the credit which the 
                        Secretary has determined will be allowed to 
                        such taxpayer under section 36C for the taxable 
                        year ending in such applicable period, divided 
                        by
                            ``(ii) 12, or
                    ``(B) such other amount as is elected by the 
                taxpayer.
            ``(2) Applicable period.--For purposes of this section, the 
        term `applicable period' means the 12-month period from the 
        month of July of the taxable year through the month of June of 
        the subsequent taxable year.
    ``(c) Election of Advance Payment.--A taxpayer may elect to receive 
an advance payment of the credit allowed under section 36C for any 
taxable year by including such election on a timely filed return for 
the preceding taxable year.
    ``(d) Internal Revenue Service Notification.--The Internal Revenue 
Service shall take such steps as may be appropriate to ensure that 
taxpayers who are eligible to receive the credit under section 36C are 
aware of the availability of the advance payment of such credit under 
this section.
    ``(e) Authority.--The Secretary may prescribe such regulations or 
other guidance as may be appropriate or necessary for the purposes of 
carrying out this section.''.
    (c) Clerical Amendments.--
            (1) In general.--The table of sections for subpart C of 
        part IV of subchapter A of chapter 1 of the Internal Revenue 
        Code of 1986 is amended by inserting after the item relating to 
        section 36B the following new item:

``Sec. 36C. Rent paid for principal residence.''.
            (2) Advance payment.--The table of sections for chapter 77 
        of such Code is amended by inserting after the item relating to 
        section 7527 the following new item:

``Sec. 7527A. Advance payment of middle class tax credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2022.
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