House Bill No. [insert bill number] seeks to revise the taxation of Social Security benefits in Montana by exempting these benefits from state income tax. The bill amends Sections 15-30-2101 and 15-30-2120 of the Montana Code Annotated (MCA) by deleting the language that includes "social security benefits received or accrued while a resident of the state" in the definition of "Montana source income." A new provision is added to clarify that Social Security benefits are not included in taxable income for residents. This change aims to alleviate the tax burden on individuals receiving Social Security benefits, providing financial relief to retirees and those dependent on these benefits.

Additionally, the bill introduces modifications to the tax code regarding deductions and subtractions from taxable income. It allows for the subtraction of Social Security benefits while maintaining existing provisions for military pensions and retirement income. Taxpayers aged 65 and older will benefit from an increased subtraction of $5,500, adjusted annually for inflation. The bill also sets an effective date of January 1, 2026, with provisions applying to income tax years beginning after December 31, 2025, allowing for a transition period for taxpayers and the state. Overall, the bill aims to provide tax relief to seniors and military personnel while ensuring alignment with federal guidelines on education savings and contributions.

Statutes affected:
LC Text: 15-30-2101, 15-30-2120
HB0148_1(1): 15-30-2101, 15-30-2120
HB0148_1(2): 15-30-2101, 15-30-2120
HB0148_1(3): 15-30-2101, 15-30-2120
HB0148_1(4): 15-30-2101, 15-30-2120
HB0148_1(5): 15-30-2101, 15-30-2120
HB0148_1(6): 15-30-2101, 15-30-2120
HB0148_1: 15-30-2101, 15-30-2120