Bill > HB827

This bill revises the taxation of Social Security benefits in Montana by modifying how these benefits are calculated for state income tax purposes. The bill changes the base and adjusted base amounts used to determine the taxable portion of Social Security and Tier 1 railroad retirement benefits. For single or head of household filers, the base amount is reduced from $40,000 to $32,500, and the adjusted base amount is reduced from $49,000 to $41,500. For married couples filing jointly, the base amount is reduced from $65,000 to $48,500, and the adjusted base amount is reduced from $77,000 to $60,500. Additionally, for married individuals filing separately who lived with their spouse during the year, the base and adjusted base amounts are set to $0. The calculation method follows the federal Internal Revenue Code Section 86, but with these new Montana-specific thresholds. The bill includes a provision that ensures taxpayers will not pay more taxes than they would have before this calculation. The changes will become effective January 1, 2026, and will apply to tax years beginning after December 31, 2025, potentially affecting how many Montana residents report and pay taxes on their Social Security benefits.

Budget and Finance

https://bills.legmt.gov/#/laws/bill/2/LC2895