Senate Bill 546, introduced in the Montana Legislature on March 25, 2025, aims to revise the calculation of income tax liabilities for certain taxpayers by establishing an income-based tax credit. This proposed legislation, sponsored by Senators D. Fern and P. Flowers, seeks to provide financial relief to low-income individuals and families while gradually phasing out the credit as income increases.

The bill outlines a fixed, one-time tax credit calculated as 4.7% of Montana taxable income for qualifying taxpayers. The eligibility thresholds vary based on filing status: individuals with less than $1,000 in taxable income, heads of households with less than $1,500, and joint filers with less than $2,000 can benefit from the credit. However, the credit amount decreases incrementally as income rises, ultimately phasing out completely once taxpayers exceed the specified income limits.

Key debates surrounding Senate Bill 546 have focused on its potential impact on state revenue and the effectiveness of the proposed credit in alleviating financial burdens for low-income residents. Supporters argue that the bill addresses income inequality and provides necessary support for struggling families, while opponents express concerns about the long-term fiscal implications for the state budget.

The economic implications of this bill could be significant, as it aims to enhance disposable income for lower-income households, potentially stimulating local economies. However, critics warn that the phased approach may not adequately support those who experience slight increases in income but remain financially vulnerable.

As the legislative process unfolds, the future of Senate Bill 546 remains uncertain. If passed, it could mark a notable shift in Montana's tax policy, reflecting a growing recognition of the need for targeted financial assistance in a changing economic landscape. The bill's progress will be closely monitored by both supporters and detractors as it moves through the legislative chambers.