HELENA — A Billings senator wants to provide a one-time income tax credit to renters of up to $250.
The Senate Taxation Committee on Wednesday heard Senate Bill 318, by Democratic Sen. Kendall Van Dyk.
About one-third of Montanans rent, Van Dyk said, but in his district, about half the residents are renters.
When the Legislature authorizes property tax breaks to homeowners and businesses, renters are usually forgotten, Van Dyk said.
“I think all forms of tax relief should be at the table,” Van Dyk said.
In 2007, Van Dyk said he and a Republican legislator tried unsuccessfully to offer renters a tax credit. That’s when the Legislature approved Gov. Brian Schweitzer’s $400-per-homeowner tax rebate for homeowners. Gov. Steve Bullock has proposed a similar $400-per-homeowner rebate this year.
While a $250 tax credit won’t be enough for a renter to make a down payment on a house, Van Dyk said it would provide them some financial relief.
Sean McQuillan, speaking for the 7,500 students who belong to the Montana Public Interest Research Group, favored the bill.
“At least to someone like me, a $250 tax rebate would be huge,” he said. “I assure you, I’d go spend it and help our economy.”
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Sam Thompson, a renter in Helena who lives in building with three other renters, also backed the bill.
“It may not seem like a lot of money, but $250 is about half of my (pay)check,” he said.
The committee took no immediate vote on the bill.
Here’s how it would work:
SB318 would provide an income tax credit of up to $250 to each qualifying renter for rent paid for a taxpayer’s residence in 2013. It would be limited to one credit per household among all people living in that rental property.
The credit, which is a dollar-for-dollar reduction in tax liability, would come in the fiscal year that starts July 1, 2014. It would be equal to 15 percent of the gross rent paid, up to a maximum credit of $250. To qualify, the taxpayer must have rented the resident or residences for at least seven months in 2013 and submit a form to the Revenue Department to claim the credit.
The credit is nonrefundable.
The Revenue Department estimated that 48,294 people will take the full $250 credit. The tax credits would cost the state treasury about $12 million. The Revenue Department would need about $62,000 to administer the program.