The bill proposes revisions to Montana's individual income tax laws, specifically addressing the treatment of net operating losses (NOLs) and providing a transition adjustment for certain losses. Taxpayers will have the option to elect a transition adjustment for their Montana net operating loss carryover, which will be calculated based on the differences between federal and Montana taxable income prior to January 1, 2024. The bill outlines the conditions under which these adjustments will be classified as positive or negative, depending on whether the Montana carryover is smaller or larger than the federal carryover. Additionally, taxpayers must make this election on their 2024 income tax return by October 15, 2025, and the department of revenue is authorized to create necessary forms and rules for implementation.

The bill also establishes that if taxpayers do not make the election by the specified deadline, they will be unable to claim the carryforward adjustment, reverting to the provisions of previous legislation. Furthermore, the act is designed to take effect immediately upon passage and approval, with retroactive applicability to income tax years beginning after December 31, 2023. This ensures that the adjustments can be applied to the relevant tax years, providing clarity and support for taxpayers navigating their income tax obligations.