Budget & Taxes (Income Tax)

died · Montana · Senate May 23, 2025

SB 538: Provide income tax deduction for qualified business income

SB 538 would allow Montana taxpayers to claim the same qualified business income deduction they use on their federal tax returns under Section 199A of the Internal Revenue Code. This directly affects Montana business owners who operate as sole proprietors, S-corps, or partnerships and qualify for the federal deduction. The bill amends Montana's tax code to automatically include this deduction when calculating state taxable income, aligning Montana's rules with the federal provision. It applies retroactively and takes effect immediately upon enactment. The bill died in committee in May 2025 and was not enacted.

Topics ✓ Budget & TaxesSupports Budget & TaxesProvides tax deduction for business owners, reducing state tax burden. Aligns with federal policy, offering tax relief for small businesses under Montana's tax code.90% confidence

Sub-Topics Business Taxes Income Tax

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died · Montana · House May 22, 2025

HB 827: Revise social security income taxation

HB 827 aimed to revise the taxation of Social Security benefits at the state level in Montana. The bill proposed to modify how the federal calculation for taxing Social Security benefits is applied when determining an individual's state income tax. This change would have directly affected Montana residents receiving Social Security benefits by potentially altering the portion of those benefits subject to state income tax. The bill included provisions for a delayed effective and applicability date.

Topics ✓ Budget & TaxesSupports Budget & TaxesBill revises state tax on Social Security benefits, likely reducing tax burden for seniors (middle/lower income), aligning with tax relief indicator.85% confidence

Sub-Topics Income Tax

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introduced · Montana · Legislature Mar 21, 2025

LC 4176: Provide income tax credits for contributions to a community improvement organization

This bill creates an income tax credit for Montana taxpayers who donate cash to qualifying community improvement organizations. Taxpayers can claim a credit equal to 10% of their Montana taxable income or $3,000 (whichever is lower), with a total annual limit of $2 million in 2026 and $5 million in 2027 onward. The credit can be carried forward up to three years if not fully used in the donation year. To qualify, organizations must be 501(c)(3) nonprofits focused on public facilities (not including those with paid staff), and donations cannot overlap with existing charitable deduction benefits.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates income tax credit for donations, providing tax relief to taxpayers and incentivizing community investment, aligning with fiscal support indicators.95% confidence

Sub-Topics Business Taxes Income Tax Tax Credits

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introduced · Montana · Legislature Mar 21, 2025

LC 1002: Provide income tax deduction for qualified business income

This bill (LC 1002) allows Montana taxpayers who claim the federal qualified business income deduction (Section 199A of the Internal Revenue Code) to also deduct that same amount from their Montana state taxable income. It directly affects Montana residents and businesses operating as pass-through entities (like S-corps, partnerships, and sole proprietorships) that qualify for the federal deduction. The key provision amends Montana’s tax code to add a specific subtraction for the federal 199A deduction amount, aligning state tax calculations with federal treatment. This reduces Montana taxable income by the amount claimed under the federal deduction, with immediate effective and retroactive application.

Topics ✓ Budget & TaxesSupports Budget & TaxesBill provides tax deduction for pass-through businesses, reducing state tax burden for qualifying entities and aligning with federal policy, directly advancing tax relief.95% confidence

Sub-Topics Business Taxes Income Tax

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introduced · Montana · Legislature Mar 24, 2025

LC 1889: Provide income tax credit for K-12 education expenses

This bill creates a Montana income tax credit for parents, guardians, or teachers paying K-12 education expenses. It allows a credit of up to $1,250 per year, covering costs like tuition, textbooks, online learning programs, tutoring, therapies, and school supplies. The credit can be claimed even without taxable income, with any excess refunded. It applies to expenses paid for children in public schools, accredited private schools, non-accredited tutors (with written disclosure), or compliant homeschools. The bill aims to help offset rising K-12 education costs for families and educators.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates refundable income tax credit for education expenses, providing direct tax relief to families without requiring taxable income, aligning with tax relief indicators.95% confidence ✓ EducationSupports EducationCreates tax credit for K-12 expenses, reducing financial barriers for families and educators, expanding access to educational resources like tuition and supplies.95% confidence

Sub-Topics Income Tax Tax Credits School Choice School Funding

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introduced · Montana · Legislature Mar 25, 2025

LC 7: Provide income based tax credit

This bill establishes a new income-based tax credit for Montana individual taxpayers with low-to-moderate income. It provides a credit equal to 4.7% of taxable income, but phases out completely when income exceeds specific thresholds ($2,000 for joint filers, $1,500 for heads of household, and $1,000 for other individual filers). The credit reduces tax liability but is unavailable for dependents, trusts, or taxpayers exceeding the phaseout income levels. The bill also requires the credit to be reviewed every eight years as part of Montana's broader tax credit review process.

Topics ✓ Budget & TaxesSupports Budget & TaxesProvides tax credit reducing liability for low-to-moderate income earners, aligning with tax relief support indicator.95% confidence

Sub-Topics Business Taxes Income Tax Tax Credits

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introduced · Montana · Legislature Mar 26, 2025

LC 4355: Provide income tax credit for payment processing fees directed to a charitable organization

This Montana bill (LC 4355) creates an income tax credit for businesses that direct payment processing fees (like credit card processing costs) to charitable organizations. The credit equals the amount of those fees directed to charities and can be applied against either individual or corporate income tax. Any unused credit can be carried forward for up to two years. The bill defines "charitable organization" as one qualifying under federal tax law and clarifies that this credit does not replace existing charitable deduction options.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates tax credit for businesses directing payment processing fees to charities, providing tax relief and encouraging charitable giving, supporting tax policy.95% confidence

Sub-Topics Business Taxes Income Tax Tax Credits

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introduced · Montana · Legislature Mar 28, 2025

LC 2944: Generally revise education tax credit laws

This bill creates a $250 annual tax credit for Montana parents or legal guardians of children attending nonpublic schools. It directly affects families with children aged 5-19 enrolled in qualifying nonpublic schools (as defined in Montana law). The credit, which cannot exceed a taxpayer's income tax liability, may be carried forward up to three years if not fully used in the current tax year. The bill also adds this new credit to Montana's scheduled tax credit review process, requiring its evaluation every eight years starting in 2025.

Topics ✓ Budget & TaxesSupports Budget & TaxesCreates $250 annual tax credit for nonpublic school parents, reducing taxable income and providing direct tax relief - advancing tax policy.90% confidence ✓ EducationSupports EducationCreates $250 annual tax credit for nonpublic school families, expanding educational access options for K-12 students through direct financial support.90% confidence

Sub-Topics Business Taxes Income Tax Tax Credits School Choice

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introduced · Montana · Legislature Mar 30, 2025

LC 3865: Establish a child income tax credit

Montana's LC 3865 establishes a refundable child tax credit of $1,000 per qualifying child under age 5 for eligible residents. To claim it, taxpayers must have earned income, a valid Social Security number for each child, and meet income limits ($35,000 single/head of household, $65,000 married filing jointly). The credit is refundable - meaning families can receive cash even if they owe no state tax - and adjusts annually for inflation based on the Consumer Price Index. This policy directly affects Montana parents with young children who meet income and documentation requirements.

Topics ✓ Budget & TaxesSupports Budget & TaxesRefundable child tax credit provides direct tax relief to low-income families, aligning with support indicators for middle/lower income tax relief.90% confidence

Sub-Topics Business Taxes Income Tax Tax Credits

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died · Montana · Legislature May 20, 2025

LC 1732: Lower tax rate on income from Montana manufacturing

Montana's LC 1732 bill reduces income tax rates specifically for income earned from manufacturing activities within the state. It establishes a new tax bracket where income from Montana manufacturing is taxed at 2.7% on the first portion (matching standard income thresholds: $41,000 for joint filers, $30,750 for heads of household, etc.) and 3.9% on amounts above those thresholds. This applies directly to Montana-based manufacturers, including businesses and individuals earning manufacturing income within Montana. The bill modifies Montana's tax code to create this preferential rate, lowering the tax burden compared to the standard 4.7% rate on regular income.

Topics ✓ Budget & TaxesSupports Budget & TaxesBill reduces tax rates for Montana manufacturing income, providing targeted tax relief to businesses and individuals in this sector per tax brackets.95% confidence

Sub-Topics Business Taxes Income Tax Tax Incentives

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