Establish a Montana workforce housing tax credit
HB 21 would create a new Montana workforce housing tax credit for taxpayers with an ownership interest in a qualified low-income housing project that receives an eligibility statement from the Board of Housing. The credit would begin for tax years starting after December 31, 2025, apply to projects placed in service on or after January 1, 2026, and be available for six years per project. It could be claimed against several state tax liabilities, including individual and corporate income taxes, insurance premium taxes, and certain other taxes, and unused credit amounts could be carried forward for up to five years.
The bill sets a statewide cap of $1.5 million in credits per allocation year, with unused, revoked, or recovered credits available for later allocation. It also ties the state credit to the federal low-income housing credit: if the federal credit is recaptured or disallowed, the Montana credit is recaptured or disallowed in the same amount. The Board of Housing would administer the program through the qualified allocation plan process, issue eligibility statements after final cost certification, and stop awarding reservations after December 31, 2031. The bill also amends the tax-credit review statute to add the workforce housing credit to the list of credits subject to periodic legislative review.
HB 21 would add new provisions to Title 15 governing a workforce housing tax credit and would also extend the tax credit review framework in 15-30-2303 to include the new credit. In practice, it would create a state tax incentive for developers and investors in qualifying low-income housing projects, potentially reducing tax liability across income tax, insurance premium tax, and related tax categories. The bill would also place administrative responsibility on the Board of Housing and create rules for allocation, carryforward, recapture, and project-level limits tied to federal housing-credit rules.
The bill appears to have received generally favorable early consideration, passing the House Taxation Committee 15-6, passing second reading 74-25, and later receiving unanimous approval in House Appropriations at one stage. However, the final recorded action shows it died in process, and a later Appropriations motion to take it from the table failed 8-12. That pattern suggests the concept had meaningful support, but not enough sustained backing to complete the legislative process.
The main points of contention likely centered on the cost and scope of the credit, including the $1.5 million annual allocation cap, the use of state tax credits to subsidize housing development, and whether the incentive would produce enough workforce housing to justify the revenue loss. Because the credit can be used against multiple tax types and can be passed through to owners of entities, some legislators may have been concerned about who benefits most, how much of the credit reaches developers versus investors, and whether the program overlaps too closely with the federal low-income housing credit. The failed motion to take the bill from the table indicates there was not enough consensus to revive it late in the process.