MontanaSB 5369th Legislature, Regular Session (2025)SenateWALLET

Revise income tax laws to provide conforming changes for prior legislation

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 6 benefits, 2 costs, 0 mixed.

State tax break for college savings

You can reduce Montana taxable income by up to $3,000 a year ($6,000 if filing jointly) for your contributions to family education savings accounts. The account must be owned by you, your spouse, or your child or stepchild who is a Montana resident. A related section ties other contributor deductions to Montana’s general adjustment rules, without listing a dollar cap in that section. Qualified withdrawals include education costs and certain rollovers from a college savings account to a Roth IRA, but only if they meet the federal rules in 26 U.S.C. 529(c)(3)(E). Contributions are subject to recapture if money is later used for nonqualified expenses. These changes apply to tax years beginning after December 31, 2023.

Tax break for disability ABLE savings

You can reduce Montana taxable income by up to $3,000 a year ($6,000 if filing jointly) for contributions to Montana ABLE accounts. The account must be owned by you, your spouse, or your child or stepchild who is a Montana resident. A separate provision lets the designated beneficiary, the beneficiary’s spouse, or certain relatives also deduct contributions under Montana’s general adjustment rules, without listing a dollar cap in that section. Contributions are subject to recapture if funds are later used for nonqualified expenses. These changes apply to tax years beginning after December 31, 2023.

Limits on state tax write-off

If you deducted state income taxes on your federal return, Montana makes you add some or all of that back. The addback reduces your federal itemized deductions to, at most, the amount of the federal standard deduction. This increases your Montana taxable income by that amount. The rule applies to tax years beginning after December 31, 2023.

Higher Montana taxes on business write-offs

If you claimed the federal qualified business income deduction, you must add that amount back to your Montana taxable income. Pass-through entities, estates, and trusts must also add back any state income taxes they deducted under federal law when computing Montana taxable income. These addbacks increase Montana taxable income by those same dollars. The rules apply to tax years beginning after December 31, 2023.

Spouses can split historic rehab credit

Montana now allows spouses to allocate the state historic rehabilitation tax credit between them. The credit remains a percentage of qualified rehabilitation costs for certified historic buildings in Montana.

Simpler probate paperwork with tax agency

Montana removes the rule that the Department of Revenue must send a certificate to the court clerk in probate cases. This cuts one step for personal representatives and court clerks when handling estates.

Bigger age-65 subtraction with inflation

Montana adjusts the $5,500 subtraction for taxpayers age 65 and older each year for inflation. The Department of Revenue sets the new amount by November 1 and rounds it to the nearest $10. The adjusted amount applies for that tax year.

Elderly property tax credit deadline shift

If April 15 falls on a federal holiday that moves the IRS filing date and Montana does not observe it, you can file the elderly residential property tax credit on the next Montana business day. This helps seniors avoid missing the deadline in those calendar years.

Sponsors & Cosponsors

Sponsor

Greg Hertz
Republican • Senate

Cosponsors

George Nikolakakos
Republican • House

Roll Call Votes

All Roll Calls

Yes: 296 • No: 1

House vote • 4/15/2025

Do Concur

Yes: 97 • No: 0

House vote • 4/14/2025

Do Concur

Yes: 99 • No: 1

Senate vote • 2/26/2025

Do Pass

Yes: 50 • No: 0

Senate vote • 2/25/2025