Bill would create refundable tax credit for K–12 education expenses; public‑education groups warn of diversion

Senator Jeremy Trebas opened the SB 549 hearing by saying the bill would provide a refundable income‑tax credit up to $1,250 for qualifying primary and secondary education expenses paid by parents, guardians or teachers. The credit would apply to a wide set of expenses, including tuition, textbooks, therapies, supplies and tuition for private and home education; the bill sets an applicability date of tax years beginning Jan. 1, 2026.

Proponents included the Montana Family Foundation and representatives of parent and school‑choice groups, who argued the credit helps families and teachers who currently pay out of pocket. Patrick Webb of the Montana Family Foundation said the refundable credit would help teachers who spend their own money for classroom supplies and parents who pay for alternative schooling arrangements.

Opponents included the Montana Coalition of Home Educators (which requested either striking homeschoolers from the definition or amending the bill), the Montana Quality Education Coalition and the League of Women Voters of Montana. Opponents argued the refundable credit would disproportionately benefit private‑school families, lead to diversion of state funds from public education, and pose large fiscal risks. The Montana Coalition of Home Educators urged removing home schooling from the bill because of statutory protections that have historically excluded government funding for home schools. The Montana Quality Education Coalition and other opponents estimated high potential costs and urged the legislature to prioritize public‑school funding or broad relief for taxpayers instead.

Department of Revenue staff (Aaron McNay and Shaelyn Daigle) provided a newly released fiscal note during the hearing and answered questions on administration and vendor interactions. McNay told senators the fiscal note assumed many taxpayers would use the credit and included an estimate of 75,000 households claiming some credit in the first available year; opponent witnesses pointed to larger hypothetical costs if uptake were broader and urged caution. Committee members questioned sponsors on accountability, the refundable nature of the credit, inclusion of homeschoolers and the distinction between tax credits and appropriations; sponsor Trebas said a tax credit is an incentive in the tax code for individual choices and that accountability concerns are different when using an appropriation. The committee did not record final action on SB 549 in the transcript excerpt.