Senate committee hears bill to create limited renter tax credit capped at $500

At a Senate Taxation Committee hearing, lawmakers heard testimony on Senate Bill 225, a proposal to create a refundable income tax credit for renters younger than 62 who spend a high share of household income on rent.

Sponsor Senator Morgeau, the bill’s author, told the committee the measure is intended to ease the effect of rising property taxes and rents on Montana renters. “This bill really came from a place where, you know, as we look across the state … how do you help people with property taxes in Montana as they continue to rise across the state,” Morgeau said during the presentation. He said the credit would be capped at $500 per household and limited to taxpayers with gross household income below $45,000.

The bill’s structure would require claimants to show they spend more than a threshold tied to a rent-equivalent property-tax calculation; the sponsor described that threshold as a rent-equivalent property-tax share of about 4 percent and noted that, in practice, the measure targets households spending roughly 26–27 percent of income on rent. The bill includes a sunset date so the Legislature can reassess the program after an initial period.

Proponents told the panel the credit would help students and low-income renters. Hope Morrison, representing the Associated Students of the University of Montana, said many students “are left to choose between housing and their education” and urged the committee to pass the bill. Dean Bearclaw of Western Native Voices also urged support, saying a renter credit would reduce housing insecurity and increase disposable income that could be spent in local economies.

Opponents flagged administrative and policy concerns. Alan Lloyd, executive director of the Montana Society of CPAs, said the group “reluctantly oppose[s] Senate Bill 225,” not because they oppose helping residents, but because they oppose extending relief through additional income tax credits. Lloyd cautioned that restoring credits could complicate a tax code that the Legislature simplified in 2021 and urged lawmakers to consider alternatives to credits.

The committee discussed the bill’s fiscal note and implementation. Dylan Cole, who prepared the fiscal note, said the estimate relies on census-derived income and rent data and that the fiscal note already adjusts counts to account for elderly households and renters covered by existing homeowner/renter programs. Cole said his fiscal estimate projects roughly $13 million in fiscal-year cost and that about 39,000 renters would qualify under the bill’s assumptions; he told senators the Department of Revenue used available survey data to model income bands and rent shares. Shaelyn Daigle, a unit manager at the Department of Revenue, was present to answer operational questions about administering the credit and confirmed some program details — for example, that in some voucher or subsidy situations the department would deduct subsidized portions when calculating eligible rent.

Committee members pressed for details on how subsidized housing (Section 8/voucher programs) and existing elderly homeowner/renter credits were treated in the fiscal estimate and asked about staffing. Cole said the fiscal note reduced estimated counts to account for elderly participants and that the department requested four full-time equivalent positions to administer the credit; Cole said the lower per-claim credit amount was a reason his estimate requests fewer auditors than for some other programs.

No committee action or vote was taken at the hearing. Chair Hertz closed the public hearing and said the committee would not take executive action that day because both vice chairs were absent.

The bill will return to the committee for further consideration; senators asked staff to supply additional information on Section 8 backlog and vacancy rates and indicated they may take executive action at a later meeting when committee leadership is present.