Montana Legislature approves tax deductions for education savings contributions

The Montana Legislature convened on February 12, 2025, to introduce House Bill 329, a significant piece of legislation aimed at enhancing tax benefits for families saving for education and individuals with disabilities. The bill proposes amendments to existing tax codes, specifically targeting contributions to education savings accounts and programs designed to support individuals with disabilities.

The primary purpose of House Bill 329 is to allow individuals to reduce their taxable income by up to $3,000 for contributions made to the Montana family education savings program and the Achieving a Better Life Experience (ABLE) program. This provision is designed to incentivize savings for education and disability-related expenses, thereby addressing the financial barriers faced by many families in Montana. Notably, married couples can jointly elect to treat half of their total contributions as being made by each spouse, which could further encourage savings.

Key provisions of the bill include stipulations that contributions must be made to accounts owned by the taxpayer, their spouse, or their children or stepchildren who are Montana residents. Additionally, the bill outlines that these contributions are subject to a recapture tax, ensuring that the tax benefits are appropriately managed.

Debate surrounding House Bill 329 has highlighted concerns regarding the potential impact on state revenue, with some lawmakers questioning whether the tax deductions could lead to significant budget shortfalls. Proponents argue that the long-term benefits of increased educational savings and support for individuals with disabilities will outweigh any immediate fiscal concerns.

The bill's implications extend beyond tax policy; it reflects a broader commitment to enhancing educational opportunities and support for vulnerable populations in Montana. Experts suggest that if passed, House Bill 329 could serve as a model for similar initiatives in other states, potentially influencing national discussions on education funding and disability support.

As the legislative process continues, stakeholders are closely monitoring the bill's progress, with discussions expected to intensify in the coming weeks. The outcome of House Bill 329 could have lasting effects on Montana's educational landscape and the financial well-being of its residents.