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Committee tables bill to exempt military retirement from state income tax after fiscal concerns
Summary
House Bill 652, which would have removed state income tax on military retirement and survivor benefits, was tabled by the taxation committee 20-1 after opponents warned the measure could cost the state roughly $15 million a year and exacerbate tax regressivity.
House Bill 652, a proposal to eliminate state income taxation on military pensions, retirement and survivor benefits, was tabled during the House Taxation Committee's executive session by a vote of 20-1.
Sponsor Representative Nellie Nicholl framed the bill as a way to attract and retain veterans, saying military retirees often start businesses and fill needed jobs in Montana. “When veterans retire they often start a second career,” Nicholl said in the hearing.
Opponents included Rose Bender of the Montana Budget and Policy Center, who thanked the committee for recognizing veterans' service but warned the proposal would worsen Montana's regressive tax structure and carry a large fiscal cost. Bender said the newly received fiscal note estimates the bill could cost “around 15,000,000 a year, 30,000,000 each biennium moving forward.” Department of Revenue staff participated as informational witnesses and provided the fiscal note during the hearing.
Representative Nicholl closed by urging the committee to consider veterans' incomes and noting many military retirees have modest retirement levels. After discussion the committee moved to table the bill in executive action; the voice/roll-call reflected a 20-1 tabling vote.
Ending: HB 652 is tabled; proponents and opponents agreed on veterans' contributions to the state but differed on fiscal priority and tax-equity concerns.
