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Committee hears bill to exempt Social Security from Montana income tax; opponents warn of large revenue loss
Summary
House Bill 148 would exempt Social Security benefits from Montana income tax. Proponents including AARP and retiree groups called the tax unfair to retirees; opponents warned it could cost the state roughly $100 million annually and urged a fiscal note and targeted approach.
Representative Ron Marshall introduced House Bill 148 to the House Taxation Committee, saying the measure would remove Social Security benefits from Montana’s taxable income. "Today, I bring you House Bill 148, and it is the bill to exempt Social Security benefits from taxation," Marshall said.
AARP Montana’s government-relations director, Kristin Paige Nei, testified in strong support, saying Social Security provides foundational income for roughly 172,000 Montana retirees and that Montana is one of a small number of states that still taxes Social Security benefits. "Montana is currently 1 of 8 states that still tax Social Security benefits in the nation," Nei said, and she urged lawmakers to phase out taxation to provide relief for middle-income retirees.
The Association of Montana Retired Public Employees and other retirement advocates also supported the bill, citing inflation and fixed incomes. Proponents argued that exempting Social Security would help seniors with prescription drugs, Medicare premiums, utilities and housing, and could allow retirees to remain in their homes.
Opponents said the bill’s fiscal impact would be large and regressive unless targeted. Rose Bender of the Montana Budget and Policy Center estimated the cost at "over $100,000,000 each year" and noted the state already provides targeted exemptions and credits for older residents, such as an elderly homeowner credit and a $5,500 subtraction for taxpayers age 65 and older. Amanda Curtis of the Montana Federation of Public Employees testified against the bill on the ground that sudden revenue loss could threaten public services.
Department of Revenue staffer Aaron McNay described how Montana currently follows federal rules for determining the taxable portion of Social Security and offered to provide the committee a memo with thresholds and calculations. He explained federal thresholds used in 2024 (for married filing jointly: $32,000; for single/head of household: $25,000) that determine whether Social Security becomes taxable and in what percentage range.
Members emphasized the need for a fiscal note and asked whether the sponsor would work on a targeted approach. Representative Marshall said he would consider amendments but argued the bill would act faster than potential federal changes and urged "a due pass." The committee did not take a vote at the close of the hearing.
Ending: The committee requested a fiscal note and additional written information from the Department of Revenue before executive action; the sponsor indicated openness to amendments.
