House committee hears bill to create income tax credit tied to property-tax burden

HELENA — The House Taxation Committee on Friday heard testimony on House Bill 154, a bill that would create a refundable income tax credit intended to reduce the gap between households’ property tax burdens and their ability to pay.

Representative Jonathan Karlen, who represents House District 98 in Missoula County, said the credit would tie relief to household income and property tax liability and would also apply a rent-equivalent calculation for renters. “House Bill 154 … is an income tax credit that fundamentally will address the mismatch between property tax or a family's property tax burden and their ability to pay,” Karlen said.

The bill would calculate credits using income thresholds and a share of a household’s property tax burden; Karlen provided examples where a household earning $80,000 with a $4,500 property tax bill would receive an $875 credit, and a $60,000 household with a $3,500 tax bill would receive just over $1,200, as described during the hearing. Karlen said the bill uses an existing statutory rent-equivalent assumption — roughly 15 percent of rent — to estimate the portion of rent attributable to property tax when applying the credit to renters.

Proponents emphasized the bill’s focus on fixed-income households, renters and nonprofit workers. Rose Bender of the Montana Budget and Policy Center said HB 154 “is the most effective property tax bill this session for addressing rising property taxes for lower fixed-income folks and moderate-income families,” and urged committee members to vote yes. Danny Hess, testifying for Montanans United for Sustainable Taxes (MUST), said the approach “considers an individual's whole financial picture” and urged that renters be included in property tax relief. Faith Skow of Big Sky 55 Plus said, “This bill is an essential measure to help Montana seniors and others on fixed incomes afford to stay in their homes.” Jake Brown of Shelter Whitefish and Laurie Ann Burhop of the Montana Nonprofit Association also testified in support.

The Montana Society of CPAs registered opposition, arguing against the use of tax credits generally. John Iverson of the CPAs said, “The CPAs have taken a position against all tax credits and the complications of the tax code that they cause,” and raised a timing concern: property taxes are paid at different times than taxpayers file income tax returns, which can limit the credit’s immediate usefulness to households paying property tax bills.

Department of Revenue staff provided technical information. Dylan Cole said he could “answer questions about the fiscal note,” and Jake Ford addressed staffing and implementation questions for the department.

Committee members asked technical and programmatic questions. Representative Crow and Representative Moskowitz asked how HB 154 would interact with existing property tax assistance programs, such as PTAP (Property Tax Assistance Program) for elderly homeowners and renters and programs for disabled veterans. Karlen told the committee the bill as written would not alter existing programs, and that legislative fiscal staff were performing an analysis of winners and losers to consider whether the calculation could be adjusted at the lower-income end to avoid reducing benefits for current recipients. Karlen said he would provide that analysis to the committee when available.

Committee discussion also flagged a drafting issue noted in the fiscal note: residency/tenure language in new section 2 appeared inconsistent (6 months vs. 7 months) before a conceptual amendment in the Tax Committee set the requirement to 7 months; Karlen and staff indicated the language had been conceptually corrected but the fiscal note may not reflect the amendment.

No action or vote was taken on the bill during the hearing; Karlen closed by asking the committee to consider the bill in the broader context of income-tax and property-tax policy decisions this session. The committee set no further action on record at the hearing’s close.

The hearing record contains committee questions, proponents’ and opponents’ statements, and Department of Revenue technical comment but no formal motion or vote.