"Circuit Breaker" Tax Relief Available: Homeowners and Renters, 65 or Over, May Be Eligible

JANUARY 2001 -
Estimated 130,000 Could Benefit - Beginning this year, a new property tax relief law takes effect, under
which members, who are age 65 or over, can receive either a credit on
their state income taxes or, even if they owe no taxes, a cash refund
up to $375.

commonly as the "circuit breaker" law, it provides relief not only to
eligible members who are homeowners, but also to those who rent without
any public subsidy.

to Legislative Chairman Bill Hill, "Over the years, circuit breaker
legislation, as a means for the state to provide property tax relief,
has been advanced by several leaders in the State House, including
Senate President Tom Birmingham. Under this law, relief will break-in
once an individual's property taxes exceed a certain portion of his

To be
eligible, members, 65 or over, must not be a dependent, and their
incomes must also be below certain thresholds - $40,000 for individuals
and $60,000 for couples filing jointly. It's important to note that an
individual's (or couple's) income, under this special law, includes
pension and social security benefits even though these benefits are
exempt (and continue to be so) from state income taxes.

calculate the credit or refund that you will receive, members must
determine how much their property taxes, actually paid in 2000, exceed
10% of their 2000 income. For members who lease, they will use 25% of
their rent as being property taxes (i.e., 25% of $6,000 in annual rent
equals $1,500 in property taxes).

a member's income last year was $12,000 and the property taxes he paid
or 25% of his rent amounted to $1,500, then he could receive a $300
credit or refund ($1,500 - $1,200) under the circuit breaker," explains
Hill. "Again the maximum amount for this year is $375, but for next
year (2002) it doubles to $750."

who normally do not file a state income tax return, will have to file
one this year in order to take advantage of the law. It's estimated
that some 130,000 homeowners and renters, 65 or over, will receive
either the credit or cash refund.

can obtain a credit or refund under the state's circuit breaker and
still be entitled to a property tax abatement offered at the local
level. Also, the credit or refund is not included as income for
purposes of other programs, like energy assistance.