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Committee debates exempting Social Security from Montana income tax; proponents cite fairness, opponents cite $100M price tag
Summary
Representative Ron Marshall introduced HB148 to exempt Social Security benefits from state income tax. AARP and retiree groups supported the bill; the Montana Budget and Policy Center and MFPE warned it would cost more than $100 million annually and risk state services. The Department of Revenue offered federal thresholds and agreed to provide a memo and fiscal details before executive action.
Representative Ron Marshall opened the hearing on House Bill 148, which would exempt Social Security benefits from Montana income tax and adjust definitions and applicability dates.
Kristin Page Nye of AARP Montana testified in strong support, saying Montana remains "one of eight states that still taxes Social Security benefits" and that the change would help roughly 172,000 Montana retirees, especially those on fixed incomes paying for prescriptions and Medicare premiums. Brian Thompson (Association of Montana Retired Public Employees) reiterated retiree support, citing post‑inflation pressures on fixed incomes.
Opponents warned of large fiscal consequences. Rose Bender of the Montana Budget and Policy Center estimated the exemption would cost "over $100,000,000 each year," noted existing progressive exemptions and targeted credits (elderly subtraction, elderly homeowner credit), and argued the state cannot afford the proposed universal exemption without threatening funding for core services. Amanda Curtis of MFPE said the bill risks funding for services Montanans rely on.
Aaron McNay of the Department of Revenue provided technical context, explaining the federal thresholds used to determine the taxable portion of Social Security (citing 2024 federal thresholds: $32,000 for married filing jointly and $25,000 for single/head‑of‑household as the nontaxable starting points) and offered to supply a written memo and the formal fiscal note before executive action. Committee members repeatedly requested that fiscal analysis before substantive committee action.
Members discussed targeting options versus a universal repeal. Several said a fiscal note is essential to evaluate regressivity and distributional effects; Representative Marshall said he was open to adjustments but also argued that Montana bears a particularly heavy burden on retirees and that the state could likely afford significant relief given prior surpluses.
The sponsor closed urging a do‑pass while noting potential federal action could also change taxation of Social Security in the future. No executive action was taken at the hearing.
