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 from taxation, thereby providing financial relief to military families. Additionally, the bill makes amendments to Sections 15-30-2101 and 15-30-2120 of the Montana Code Annotated (MCA) to clarify definitions related to federal taxable income and repeals a previous section from Chapter 650, Laws of 2023.

Moreover, the bill introduces a new provision allowing an additional subtraction of $5,500 for taxpayers aged 65 and older and modifies the treatment of military pensions and survivor benefits to allow for their full subtraction without limitations. It also clarifies the tax treatment of contributions to education savings accounts and the Achieving a Better Life Experience (ABLE) program, permitting taxpayers to reduce their taxable income by the lesser of $3,000 or the amount contributed. The bill establishes an effective date of January 1, 2026, applicable to tax years beginning after December 31, 2025, and includes a repealer for a previous section of law. These changes aim to simplify tax deductions for seniors and military personnel while incentivizing contributions to education and disability savings programs.

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(3): 15-30-2101, 15-30-2120
HB0652_1(4): 15-30-2101, 15-30-2120
HB0652_1: 15-30-2101, 15-30-2120