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Committee tables bill to exempt military retirement from state income tax amid fiscal concerns
Summary
Representative Nellie Nicholl sponsored HB 652 to eliminate state income tax on military retirement pay; supporters highlighted veterans' economic contributions while opponents warned of regressivity and a fiscal cost the budget center estimated at roughly $15 million per year. The committee tabled the bill 20–1.
Representative Nellie Nicholl opened HB 652 urging the committee to eliminate state tax on military retirement and survivor benefits, arguing Montana should be competitive in attracting veterans and outlining veterans’ economic contributions to the state.
Opponents included Rose Bender of the Montana Budget and Policy Center, who expressed concerns about tax incidence and structural budget balance. Bender said Montana already exempts several categories of retirees and that a broad retirement exemption would exacerbate regressivity; she described an initial fiscal estimate of roughly $15 million per year (about $30 million per biennium) and noted prior analysis that major income-tax cuts in 2003 did not reliably change migration patterns.
Aaron McNay presented the newly received fiscal note to the committee and Department of Revenue staff were available for questions. Committee members asked whether the bill simply expanded a previous 50% exemption to 100%; the sponsor said yes, and emphasized veterans’ modest retirement incomes in many cases. After discussion the committee tabled HB 652 at executive action by a vote of 20 to 1.
The bill would have a measurable fiscal effect according to testimony and the committee’s tabling leaves time for further fiscal and distributional analysis.
