Montana taxation committee hears sharp debate over HB209 school-choice tax credit

Representative Greg Overstreet introduced House Bill 209 as a voluntary state income tax credit allowing claimants to recover eligible nonpublic-education expenses such as homeschool curriculum and private tuition. Overstreet said the credit would be capped at the state portion (44.7% of A and B, which he described as approximately $6,000) and that the bill is modeled on other states and U.S. Supreme Court precedent, citing Espinosa v. Montana to argue the credit does not constitute unconstitutional direct aid to religious schools. "This is voluntary. It is a tax credit and that is all," Overstreet said.

Proponents included homeschooling parents and private-school advocates. Christine Agin, a homeschooling mother and tax accountant, described extensive drafting consultations with homeschool legal experts and said the bill’s language was intentionally narrow to cover school-like curriculum and services rather than unrelated expenses. "We made sure enlisted and included in there basically common things that you would be able to receive at a public school," Agin said, adding she disagrees with fiscal-staff cost assumptions.

Opponents ranged from homeschool advocates to public-school coalitions and accounting groups. Lance Melton of the Montana School Boards Association urged caution, saying the bill as drafted allows "any taxpayer" to claim the credit on behalf of any qualified student and warned that wealthy third parties could fund tuition and use the credit to steer state revenue away from the general fund. Melton said the bill lacks caps, tandem public/private mechanisms, and clear claimant limits that would make revenue effects predictable. "If you jump in here to the definition section... qualifying student means a student who meets the definition of a dependent. That's my kid, your kid, anybody's kid," he said, urging an amendment to limit claimants to the family member who paid the expenses.

Several witnesses representing teachers, school administrators, unions and public-policy groups argued tax credits for nonpublic schooling would divert funds from public education, reduce legislative discretion over appropriation, and risk resegregation or lowered accountability for student outcomes. The Montana Coalition of Home Educators' legislative liaison, Steve White, raised drafting concerns about inserting federal code references into Montana law and about involving the Department of Revenue in homeschool compliance.

Department of Revenue staff said the bill does not explicitly require the taxpayer claiming the credit to be a Montana resident and explained administrative limits: rental fees could be eligible but purchases of athletic equipment and instruments are not covered under the bill as drafted. Committee members asked whether a public-school parent could claim the credit for extracurricular purchases and requested follow-up on how current tax credits and exemptions interact with the proposal.

Overstreet said he would offer amendments to remove Office of Public Instruction rulemaking and substitute Department of Revenue authority, to strike the bill's section 4(b), and to clarify that the family member paying expenses is the claimant; he said HSLDA's support is contingent on those changes. The committee closed the hearing without taking a vote.

Next steps: sponsor-introduced amendments were previewed at the hearing; the committee will consider fiscal follow-up from DOR and further drafting changes before executive action.