The "Montana Child Care Savings Account Act" establishes tax-exempt child care savings accounts for Montana residents, allowing individuals and employers to contribute up to $5,000 annually, with adjustments for inflation after 2026. The bill ensures that earnings on these accounts remain tax-exempt as long as withdrawals are used for eligible child care expenses. A 10% penalty is imposed on funds withdrawn for ineligible purposes, which must also be taxed as ordinary income. The legislation outlines the responsibilities of account administrators and the process for managing these accounts, while also amending Section 15-30-2120 of the Montana Code Annotated to address the taxation of withdrawals for non-eligible expenses and introducing definitions for key terms related to the accounts.

In addition to the child care savings provisions, the bill modifies the tax code to enhance deductions and subtractions for various taxpayers, particularly those aged 65 and older, military pensions, and contributions to education savings accounts. It establishes a subtraction of $5,500 for taxpayers aged 65 and older and outlines conditions for partially excluding military pensions and survivor benefits from taxable income. The bill also provides tax benefits for contributions to the Montana family education savings program and the achieving a better life experience program, with a maximum reduction of $3,000 per taxpayer. Furthermore, it includes provisions for annual inflation adjustments for the elderly taxpayer subtraction and sets eligibility criteria for military pension subtractions, with specific expiration dates for certain provisions.

Statutes affected:
LC Text: 15-30-2120