Committee hears bill to make line-of-duty disability benefits nontaxable federally one year earlier

Senate Bill 316 received a hearing before the House State Administration Committee on Thursday. Sponsor Sen. Daniel Zolnikov opened the hearing, saying the bill would allow certain line-of-duty disability benefits paid by the municipal police officers and firefighters retirement systems to be reported to the Internal Revenue Service as nontaxable beginning Jan. 1, 2026, rather than waiting for a federal change that takes effect in 2027.

The bill’s proponents told the committee the change would not increase retirement benefits or cost the retirement funds. William Hollahan, executive director of the Montana Public Employee Retirement Administration, said the agency administers the police and firefighters retirement systems and that “these statutory changes are the only way we can report in box 2a of 1099‑R…