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Montana committee hears bill to give landlords tax credits for renting below market
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Summary
Lawmakers heard testimony on House Bill 306, which would create a nonrefundable income tax credit for landlords who rent units at least $100 below 110% of county fair‑market rent; supporters said it incentivizes affordable rentals while the Montana Society of CPAs warned the tax code would grow more complex.
Representative Denise Baum introduced House Bill 306 as a tool to encourage landlords to keep rents below market by offering an income tax credit for units rented at least $100 below 110% of county fair‑market rent. "This bill will provide an income tax credit for landlords renting dwellings below fair market rate," Baum said, describing the measure as available to both individual and corporate filers and effective for tax years beginning after Dec. 31, 2025.
The bill ties qualification to HUD fair‑market rent definitions and housing quality standards: Baum cited 24 CFR part 982 as the standard for housing quality. She told the committee the credit is nonrefundable and may be carried forward; to qualify a unit must be leased at least one year and not already receive rent reductions through another program.
Four proponents described household and community need. Dr. Alan Noonan of Common Good Montana said he supports "any other effort to improve access for people seeking accommodation." Susan Mason, a fixed‑income renter, described multiple rent increases over her lifetime and said the credit could encourage small landlords to keep units affordable. Len Broberg, another Common Good volunteer, cited research estimating roughly 30,000 Montana renter households pay more than half their income on housing. Lisa Davey, executive director of Common Good Montana, said landlords and tenants both expressed interest in the incentive and noted accessory dwelling units could be more financially viable with the credit.
Alan Lloyd, executive director of the Montana Society of CPAs, testified in reluctant opposition: "We're not opposed to supporting affordable housing," he said, but argued targeting housing through tax credits risks reinstating complexity the state previously simplified. Department of Revenue staff (Finn McMichael and David Merrien) answered detailed questions about the fiscal note and administration.
Committee members pressed technical points: whether the credit would apply to composite pass‑through entity tax, how '110% of fair‑market rent' is calculated (McMichael said HUD uses a 40th‑percentile methodology and separate fair‑market rent values exist by bedroom size), and whether the credit is intended as a monthly or annual amount. Department staff said the fiscal note assumes an annual credit of about $200 per qualifying unit on average but acknowledged the bill's language could be interpreted differently and recommended clarifying legislative language.
The hearing closed with the sponsor promising to address fiscal‑note clarifications; the committee did not take a vote during the hearing phase. The bill will next await committee action and any technical amendments to clarify calculation and application to composite taxes.