House Bill No. [insert bill number] proposes to exempt Social Security benefits from state income tax in Montana by amending the Montana Code Annotated (MCA). The bill deletes the previous inclusion of Social Security benefits in the definition of "Montana source income" and introduces a new provision stating that these benefits received or accrued by residents are not subject to taxation. This change aims to provide financial relief to residents who depend on Social Security as a primary income source. Additionally, the bill clarifies the definition of "Montana source income" to ensure that Social Security benefits are excluded, reflecting a broader trend among states to offer tax relief for retirees and individuals on fixed incomes.

The legislation also modifies the Montana income tax code by allowing taxpayers aged 65 and older to subtract an additional $5,500 from their taxable income and includes a new subtraction for Social Security benefits while maintaining existing provisions for military pensions and survivor benefits. It establishes a recapture tax for contributions to the Montana family education savings program and the achieving a better life experience program, along with guidelines for military pension subtractions. The bill sets a termination date for certain provisions, with some expiring on June 30, 2025, and others on December 31, 2033. The act is scheduled to take effect on January 1, 2026, applying to income tax years beginning after December 31, 2025.

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(7): 15-30-2101, 15-30-2120
HB0148_1(8): 15-30-2101, 15-30-2120
HB0148_1(9): 15-30-2101, 15-30-2120
HB0148_1: 15-30-2101, 15-30-2120