This bill creates a new refundable tax credit of up to $350 per year for individuals to help offset the costs of gas and electricity for their primary residence, with income limitations and requirements for landlords who include utilities in rent.
Josh Gottheimer
Representative
NJ-5
This bill introduces a new refundable tax credit, capped at $350 annually, to help individuals cover the costs of electricity and gas for their primary residence, whether paid directly or included in rent. The credit phases out for higher-income individuals and joint filers and cannot be claimed if the expenses are already deducted or if the individual is claimed as a dependent. Landlords must provide tenants with a receipt detailing the amount of rent attributable to electricity and gas service. This provision would apply to expenses incurred after the bill's enactment.
New Tax Credit Offers Up to $350 for Home Energy Bills, But High Earners Need Not Apply
The "Electricity and Gas Credit" (Section 36D) is a new tax break designed to help offset the cost of, you guessed it, electricity and gas at your primary residence. Think of it as a little help with those utility bills that seem to go up every month.
Powering Down Your Bills?
This bill aims to put some money back in your pocket by offering a tax credit of up to $350 per year. This applies whether you pay your utility bills directly or if they're bundled into your rent. The credit phases out for individuals making over $200,000 (or $400,000 for joint filers), so it's targeted at lower- and middle-income households.
Renters and Receipts
If your utilities are included in your rent, there's a new rule for your landlord. They're now required to give you a receipt by January 31st each year, breaking down how much of your rent went to electricity and gas in the previous year (Section 1). This is so you have the documentation needed to claim the credit. For example, if you're a barista paying $1500/month in rent, and $100 of that is for utilities according to your new receipt, you would annualize that to $1200 and could be eligible for the full $350 credit, provided you meet the other criteria.
The Fine Print
There are a few catches. You can't double-dip – meaning you can't claim this credit if you're already getting a tax break for the same expenses. Also, if someone else claims you as a dependent, you're out of luck (Section 1). And, while $350 is helpful, it might not make a huge dent for folks with high energy usage. The bill also defines "utility" per section 48(a)(8)(D) and "principal residence" as per section 121 of the tax code, just to keep things crystal clear.
Real-World Rollout
This credit applies to expenses paid after the bill is enacted. This could lead to slightly lower tax bills or a bigger refund for some, potentially freeing up some cash for other things. While it might not solve the bigger problem of rising energy costs, it's a step towards easing the burden, especially for those on tighter budgets. It also means a bit more paperwork for landlords, who now have to provide those utility breakdowns to tenants.