House Bill No. [insert bill number] proposes significant changes to Montana's income tax laws, specifically targeting military pensions, retirement income, and survivor benefits. The bill introduces an income tax exemption for these benefits received by retired members of the U.S. armed forces, the Montana Army National Guard, the Montana Air National Guard, and reserve components. It also amends the definition of "Montana source income" to exclude military pensions and survivor benefits, ensuring they are not subject to state taxation. Additionally, the bill makes adjustments to Sections 15-30-2101 and 15-30-2120 of the Montana Code Annotated (MCA), repealing a previous section and clarifying income source definitions to provide financial relief to military personnel and their families.

Moreover, the bill modifies the treatment of military pensions and survivor benefits by removing previous limitations on the subtraction from taxable income, allowing all military-related income to be subtracted. It also introduces a new subtraction for taxpayers aged 65 and older, increasing their allowable deduction. The legislation includes provisions for contributions to education savings accounts, enabling individuals to reduce their taxable income, and mandates annual adjustments for the senior subtraction based on inflation. The bill sets an effective date of January 1, 2026, applying to tax years beginning after December 31, 2025.

Statutes affected:
LC Text: 15-30-2101, 15-30-2120
HB0652_1(1): 15-30-2101, 15-30-2120
HB0652_1(2): 15-30-2101, 15-30-2120
HB0652_1: 15-30-2101, 15-30-2120