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Committee considers bill to temporarily make line-of-duty disability benefits federally nontaxable
Summary
Senate Bill 316 would add state statutory language mirroring federal changes so municipal police and firefighters injured in the line of duty can have their disability pensions reported as federally nontaxable for 2026; proponents urged a retroactive fix to relieve families who already paid taxes.
Senator Daniel Zolnikauv (Senate District 22) introduced Senate Bill 316, saying the bill would place a line-of-duty disability provision into state code so benefits could be reported to the Internal Revenue Service as nontaxable for 2026, effectively providing an extra year of federal tax relief before Secure Act 2 takes effect in 2027.
The bill’s backers told the House State Administration committee the change is a statutory cleanup rather than a benefit increase. William Hollahan, executive director of the Montana Public Employee Retirement Administration, said the bill would create separate…
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