Committee hears bill to exempt modest amounts of interest income to encourage saving

Representative Terry Falk opened the hearing on House Bill 132, which would allow individuals to reduce taxable income by a capped amount of interest income reported on Form 1099‑INT (a $2,500 cap for single filers; $5,000 for joint filers). Falk described the measure as ‘‘not a tax credit. It's a reduction of income’’ designed to encourage savings among risk‑averse and younger households.

Committee questioning and informational testimony clarified that the exemption would apply to ordinary interest reported on 1099‑INT (savings accounts, CDs, money‑market interest) and not to capital‑gains or dividend income. Department of Revenue staff (Brian Olson) said the deduction would be administered against ordinary interest income and that a fiscal note was pending; the sponsor expected the fiscal note soon.

Opponents focused on revenue and administration. Alan Lloyd of the Montana Society of CPAs repeated concerns that incremental tax‑code changes erode return simplification and recommended using the budget process to allocate direct support if the policy is merited. Rose Bender of the Montana Budget & Policy Center urged the committee to hold the bill until the committee has a fuller sense of total revenue impacts from multiple bills this session.

Representative Falk closed by reiterating the policy intent to help smaller savers and saying the committee could amend the bill to limit eligibility by income if desired, but that change would add complexity.

Ending: The hearing closed with no committee vote; DOR staff remained available for questions while the fiscal note is finalized.