Bill would create refundable housing‑fairness income tax credit tied to property taxes and rent

Representative Jonathan Karlen introduced House Bill 154 to the House Taxation Committee, describing it as a backstop to prevent households from facing property taxes that exceed their ability to pay. The bill would create a housing fairness income tax credit keyed to a taxpayer's property taxes paid; the proposal also extends relief to renters by applying a statute‑defined rent‑equivalent amount (15 percent of rent) as an eligible base.

Sponsor's framing and examples: Karlen said the credit would scale with income and property taxes paid so that, for example, a household with a median Montana income (he cited about $69,000) and a roughly $4,000 property tax bill could receive a credit reducing their out‑of‑pocket property tax by roughly 27 percent under the bill's formula. He described the credit as refundable and aimed at households most affected by rising housing costs.

Support and testimony: Dozens of advocates and organizations testified in favor. Rose Bender of the Montana Budget and Policy Center said tax credits tied to ability to pay are a targeted, common approach and noted that 29 states plus DC offer similar credits. Danny Hess of Montanans United for Sustainable Taxes (MUST) and housing advocates including Shelter Whitefish and Big Sky 55 Plus urged inclusion of renters, which this bill does via the rent‑equivalent calculation. AARP Montana testified in support on behalf of older Montanans, and multiple nonprofits and youth advocates emphasized that renters and lower‑income households must be included in property‑tax relief.

Opposition and fiscal administration: The Montana Society of CPAs testified in reluctant opposition on principle, saying they generally oppose creating new tax credits. Department of Revenue staff and the income and withholding bureau said they would need additional staff to administer a new refundable credit. Jake Ford (DOR Income & Withholding) told the committee the fiscal note estimated a large program cost (a six‑ or seven‑figure annual fiscal exposure; the draft fiscal note discussed in testimony referenced ~ $100 million in program cost) and the department requested additional FTE (12 in the first years of implementation) to handle intake, verification and calculations; staff said initial years would be labor‑intensive while filing patterns are established.

Definitions and mechanics discussed: The bill would let renters claim the credit using a rent‑equivalent method (15 percent of annual rent) to approximate the portion of rent attributable to property taxes. DOR and sponsor discussions covered documentation requirements (rent receipts, property tax receipts) and interactions with existing programs such as PTAP (Property Tax Assistance Program) and the elderly homeowner/renter credit; sponsor Karlen suggested potential future consolidation or simplification across programs.

Committee questions and next steps: Committee members asked about fiscal exposure, potential effects on voter behavior for local levies, administrative burden and the potential for perverse incentives. The sponsor and proponents said the credit targets households with high effective property tax rates and noted similar programs in other states. DOR staff described expected claim volumes and verification needs. Representative Karlen closed the hearing, said he would work on fiscal details and that the committee would take executive action at a later date.