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Creates a new federal individual tax deduction for qualified rent paid on a taxpayer’s primary residence, allowing up to $4,000 per individual per year for eligible taxpayers. The deduction is available to non-itemizers, is limited by adjusted gross income thresholds, and the dollar cap is indexed for inflation beginning after 2027; it applies to tax years starting after December 31, 2026.
The bill provides broad, targeted tax relief to many renters (including non-itemizers) and protects the benefit's real value over time, but does so at the cost of federal revenue, added tax complexity, and uneven benefits—especially for those just above income cutoffs and renters in high-cost areas.
Renters (particularly low- and middle-income households) can deduct up to $4,000 of rent from taxable income, directly lowering their federal tax bills.
Taxpayers who do not itemize (typical standard-deduction filers) can claim the rent deduction, making the benefit widely accessible to middle-class families who otherwise would not receive itemized rental relief.
The deduction is targeted by income phase-outs so most benefit flows to lower- and middle-income renters, and the dollar limit is indexed for inflation after 2027 to help preserve the deduction's real value over time.
All taxpayers face a higher federal budgetary cost because the deduction reduces federal revenue, potentially increasing deficits or requiring spending cuts or tax offsets elsewhere.
Taxpayers and the IRS will face added complexity and compliance costs as the IRS must implement a new deduction, update forms, issue guidance, and enforce eligibility rules.
Moderate earners just above the AGI phase-out thresholds may receive no benefit while those just below receive the full deduction, creating a cliff effect that produces uneven and potentially unfair distribution of relief.
Introduced March 3, 2026 by Greg Landsman · Last progress March 3, 2026