The "Montana Child Care Savings Account Act" establishes tax-exempt child care savings accounts aimed at helping individuals manage child care expenses. The bill allows employees and residents to create these accounts with tax-deductible contributions up to $5,000 annually, or an inflation-adjusted amount thereafter. Earnings on these accounts are also tax-exempt if withdrawals are made for eligible child care expenses. A 10% penalty is imposed on funds withdrawn for ineligible purposes, which will also be taxed as ordinary income. The bill amends Section 15-30-2120 of the Montana Code Annotated to address the taxation of withdrawals for non-eligible expenses and outlines the responsibilities of account administrators, including fiduciary management and notification of tax status to account holders.

Additionally, the bill modifies the Montana income tax code by allowing a subtraction of $5,500 for taxpayers aged 65 and older and specifies conditions for reducing taxable income for contributions to education savings accounts or better life experience programs. It includes provisions for annual inflation adjustments of the senior subtraction and establishes a recapture tax for contributions to education and life experience accounts. Certain provisions will expire on June 30, 2025, and December 31, 2033, with new sections added to Title 15, chapter 30, and the act applying to income tax years beginning after December 31, 2025.

Statutes affected:
LC Text: 15-30-2120