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1 HOUSE BILL NO. 129
2 INTRODUCED BY L. JONES, W. GALT, J. ISALY, J. SECKINGER, J. WEBER, S. ROSENZWEIG, E.
3 TILLEMAN, D. BEDEY, E. BUTTREY, M. CUFFE, W. CURDY, B. GILLESPIE, S. GIST, C. SPRUNGER, G.
4 LAMMERS, D. LOGE, S. FITZPATRICK, B. LER, K. WALSH, G. OBLANDER, J. FITZPATRICK, J. KARLEN,
5 S. MORIGEAU, M. THANE, P. TUSS, Z. WIRTH
6
7 A BILL FOR AN ACT ENTITLED: “AN ACT PROVIDING AN INCOME TAX BENEFIT FOR VOLUNTEER
8 FIREFIGHTERS AND VOLUNTEER EMERGENCY CARE PROVIDERS; PROVIDING A DEDUCTION FROM
9 TAXABLE INCOME; LIMITING THE DEDUCTION TO FULL-SERVICE VOLUNTEERS; PROVIDING FOR AN
10 ANNUAL INCREASE IN THE DEDUCTION BY AN INFLATION FACTOR; AMENDING SECTION 15-30-2120,
11 MCA; AND PROVIDING A DELAYED EFFECTIVE DATE AND AN APPLICABILITY DATE.”
12
13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
14
15 Section 15-30-2120, MCA, is amended to read:
16 "15-30-2120. (1)
17 The items in subsection (2) are added to and the items in subsection (3) are subtracted from federal taxable
18 income to determine Montana taxable income.
19 (2) The following are added to federal taxable income:
20 (a) to the extent that it is not exempt from taxation by Montana under federal law, interest from
21 obligations of a territory or another state or any political subdivision of a territory or another state and exempt-
22 interest dividends attributable to that interest except to the extent already included in federal taxable income;
23 (b) that portion of a shareholder's income under subchapter S. of Chapter 1 of the Internal
24 Revenue Code that has been reduced by any federal taxes paid by the subchapter S. corporation on the
25 income;
26 (c) depreciation or amortization taken on a title plant as defined in 33-25-105;
27 (d) the recovery during the tax year of an amount deducted in any prior tax year to the extent that
28 the amount recovered reduced the taxpayer's Montana income tax in the year deducted; ****
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1 (e) an item of income, deduction, or expense to the extent that it was used to calculate federal
2 taxable income if the item was also used to calculate a credit against a Montana income tax liability;
3 (f) a deduction for an income distribution from an estate or trust to a beneficiary that was included
4 in the federal taxable income of an estate or trust in accordance with sections 651 and 661 of the Internal
5 Revenue Code, 26 U.S.C. 651 and 661;
6 (g) a withdrawal from a medical care savings account provided for in Title 15, chapter 61, used for
7 a purpose other than an eligible medical expense or long-term care of the employee or account holder or a
8 dependent of the employee or account holder;
9 (h) a withdrawal from a first-time home buyer savings account provided for in Title 15, chapter 63,
10 used for a purpose other than for eligible costs for the purchase of a single-family residence;
11 (i) for a taxpayer that deducts the qualified business income deduction pursuant to section 199A
12 of the Internal Revenue Code, 26 U.S.C. 199A, an amount equal to the qualified business income deduction
13 claimed;
14 (j) for an individual taxpayer that deducts state income taxes pursuant to section 164(a)(3) of the
15 Internal Revenue Code, 26 U.S.C. 164(a)(3), an additional amount equal to the state income tax deduction
16 claimed, not to exceed the amount required to reduce the federal itemized amount computed under section 161
17 of the Internal Revenue Code, 26 U.S.C. 161, to the amount of the federal standard deduction allowable under
18 section 63(c) of the Internal Revenue Code, 26 U.S.C. 63(c); and
19 (k) for a pass-through entity, estate, or trust, the amount of state income taxes deducted pursuant
20 to section 164(a)(3) of the Internal Revenue Code, 26 U.S.C 164(a)(3).
21 (3) To the extent they are included as income or gain or not already excluded as a deduction or
22 expense in determining federal taxable income, the following are subtracted from federal taxable income:
23 (a) a deduction for an income distribution from an estate or trust to a beneficiary in accordance
24 with sections 651 and 661 of the Internal Revenue Code, 26 U.S.C. 651 and 661, recalculated according to the
25 additions and subtractions in subsections (2) and (3)(b) through (3)(o) (3)(p);
26 (b) if exempt from taxation by Montana under federal law:
27 (i) interest from obligations of the United States government and exempt-interest dividends
28 attributable to that interest; and ****
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1 (ii) railroad retirement benefits;
2 (c) (i) salary received from the armed forces by residents of Montana who are serving on active
3 duty in the regular armed forces and who entered into active duty from Montana;
4 (ii) the salary received by residents of Montana for active duty in the national guard. For the
5 purposes of this subsection (3)(c)(ii), "active duty" means duty performed under an order issued to a national
6 guard member pursuant to:
7 (A) Title 10, U.S.C.; or
8 (B) Title 32, U.S.C., for a homeland defense activity, as defined in 32 U.S.C. 901, or a contingency
9 operation, as defined in 10 U.S.C. 101, and the person was a member of a unit engaged in a homeland
10 defense activity or contingency operation.
11 (iii) the amount received by a beneficiary pursuant to 10-1-1201; and
12 (iv) all payments made under the World War I bonus law, the Korean bonus law, and the veterans'
13 bonus law. Any income tax that has been or may be paid on income received from the World War I bonus law,
14 Korean bonus law, and the veterans' bonus law is considered an overpayment and must be refunded upon the
15 filing of an amended return and a verified claim for refund on forms prescribed by the department in the same
16 manner as other income tax refund claims are paid.
17 (d) annual contributions and income in a medical care savings account provided for in Title 15,
18 chapter 61, and any withdrawal for payment of eligible medical expenses or for the long-term care of the
19 employee or account holder or a dependent of the employee or account holder;
20 (e) contributions or earnings withdrawn from a family education savings account provided for in
21 Title 15, chapter 62, or from a qualified tuition program established and maintained by another state as
22 provided in section 529(b)(1)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 529(b)(1)(A)(ii), for qualified
23 education expenses, as defined in 15-62-103, of a designated beneficiary;
24 (f) interest and other income related to contributions that were made prior to January 1, 2024, that
25 are retained in a first-time home buyer savings account provided for in Title 15, chapter 63, and any withdrawal
26 for payment of eligible costs for the first-time purchase of a single-family residence;
27 (g) for each taxpayer that has attained the age of 65, an additional subtraction of $5,500;
28 (h) the amount of a scholarship to an eligible student by a student scholarship organization ****
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1 pursuant to 15-30-3104;
2 (i) a payment received by a private landowner for providing public access to public land pursuant
3 to Title 76, chapter 17, part 1;
4 (j) the amount of any refund or credit for overpayment of income taxes imposed by this state or
5 any other taxing jurisdiction to the extent included in gross income for federal income tax purposes but not
6 previously allowed as a deduction for Montana income tax purposes;
7 (k) the recovery during the tax year of any amount deducted in any prior tax year to the extent that
8 the recovered amount did not reduce the taxpayer's Montana income tax in the year deducted;
9 (l) the amount of the gain recognized from the sale or exchange of a mobile home park as
10 provided in 15-31-163;
11 (m) payments from the Montana end of watch trust as provided in 2-15-2041;
12 (n) (i) subject to subsection (9), a portion of military pensions or military retirement income as
13 calculated pursuant to subsection (8) that is received by a retired member of:
14 (A) the armed forces of the United States, as defined in 10 U.S.C. 101;
15 (B) the Montana army national guard or the army national guard of other states;
16 (C) the Montana air national guard or the air national guard of other states; or
17 (D) a reserve component, as defined in 38 U.S.C. 101, of the United States armed forces; and
18 (ii) subject to subsection (9), up to 50% of all income received as survivor benefits for military
19 service provided for in subsection (3)(n)(i)(A) through (3)(n)(i)(D); and
20 (o) subject to subsection (10), for each taxpayer that is a qualified volunteer firefighter or volunteer
21 emergency care provider, an additional subtraction of $3,000; and
22 (o)(p) the amount of the property tax rebate received under 15-1-2302.
23 (4) (a) A taxpayer who, in determining federal taxable income, has reduced the taxpayer's
24 business deductions:
25 (i) by an amount for wages and salaries for which a federal tax credit was elected under sections
26 38 and 51(a) of the Internal Revenue Code, 26 U.S.C. 38 and 51(a), is allowed to deduct the amount of the
27 wages and salaries paid regardless of the credit taken; or
28 (ii) for which a federal tax credit was elected under the Internal Revenue Code is allowed to ****
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1 deduct the amount of the business expense paid when there is no corresponding state income tax credit or
2 deduction, regardless of the credit taken.
3 (b) The deductions in subsection (4)(a) must be made in the year that the wages, salaries, or
4 business expenses were used to compute the credit. In the case of a partnership or small business corporation,
5 the deductions in subsection (4)(a) must be made to determine the amount of income or loss of the partnership
6 or small business corporation.
7 (5) (a) An individual who contributes to one or more accounts established under the Montana
8 family education savings program or to a qualified tuition program established and maintained by another state
9 as provided in section 529(b)(1)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 529(b)(1)(A)(ii), may reduce
10 taxable income by the lesser of $3,000 or the amount of the contribution. In the case of married taxpayers, each
11 spouse is entitled to a reduction, not in excess of $3,000, for the spouses' contributions to the accounts.
12 Spouses may jointly elect to treat half of the total contributions made by the spouses as being made by each
13 spouse. The reduction in taxable income under this subsection (5)(a) applies only with respect to contributions
14 to an account of which the account owner is the taxpayer, the taxpayer's spouse, or the taxpayer's child or
15 stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of subsection (2)(d) do not
16 apply with respect to withdrawals of contributions that reduced federal taxable income.
17 (b) Contributions made pursuant to this subsection (5) are subject to the recapture tax provided for
18 in 15-62-208.
19 (6) (a) An individual who contributes to one or more accounts established under the Montana
20 achieving a better life experience program or to a qualified program established and maintained by another
21 state may reduce taxable income by the lesser of $3,000 or the amount of the contribution. In the case of
22 married taxpayers, each spouse is entitled to a reduction, not to exceed $3,000, for the spouses' contributions
23 to the accounts. Spouses may jointly elect to treat one-half of the total contributions made by the spouses as
24 being made by each spouse. The reduction in taxable income under this subsection (6)(a) applies only with
25 respect to contributions to an account for which the account owner is the taxpayer, the taxpayer's spouse, or
26 the taxpayer's child or stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of
27 subsection (2)(d) do not apply with respect to withdrawals of contributions that reduced taxable income.
28 (b) Contributions made pursuant to this subsection (6) are subject to the recapture tax provided in ****
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1 53-25-118.
2 (7) (a) By November 1 of each year, the department shall multiply the subtraction subtractions
3 from federal taxable income in subsections (3)(g) and (3)(o) by the inflation factor for that tax year for a
4 taxpayer that either:
5 (i) has attained the age of 65 contained in subsection (3)(g) by the inflation factor for that tax year,
6 ; or
7 (ii) is a qualified volunteer firefighter or volunteer emergency care provider.
8 (b) The department shall round the results in subsection (7)(a) rounding the result to the nearest
9 $10. The resulting amount is amounts are effective for that tax year and must be used as the basis for the
10 subtraction from federal taxable income determined under subsection subsections (3)(g) and (3)(o).
11 (8) (a) Subject to subsection (9), the subtraction in subsection (3)(n)(i) is equal to the lesser of:
12 (i) the amount of Montana source wage income on the return; or
13 (ii) 50% of the taxpayer's military pension or military retirement income.
14 (b) For the purposes of subsection (8)(a)(i), "Montana source wage income" means:
15 (i) wages, salary, tips, and other compensation for services performed in the state;
16 (ii) net income from a trade, business, profession, or occupation carried on in the state; and
17 (iii) net income from farming activities carried on in the state.
18 (9) The subtractions in subsection (3)(n):
19 (a) may only be claimed by a person who:
20 (i) becomes a resident of the state after June 30, 2023; or
21 (ii) was a resident of the state before receiving military pension or military retirement income and
22 remained a resident after receiving military pension or military retirement income;
23 (b) may only be claimed for 5 consecutive years after satisfying the provisions of subsection (9)(a);
24 and
25 (c) are not available if a taxpayer claimed the exemption before becoming a nonresident.
26 (10) To be entitled to the subtraction in subsection (3)(o), a taxpayer, during the year for which the
27 deduction is claimed, must have:
28 (a) been a volunteer firefighter as defined in 19-17-102 or a volunteer emergency care provider as ****
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1 defined in 50-6-202;
2 (b) been an active, nonpaid member during the entire calendar year of the same volunteer fire
3 company organized under the provisions of Title 7, chapter 33, part 21, 22, 23, or 24, or the same emergency
4 medical service as defined in 50-6-302; and
5 (c) completed a minimum of 30 hours of training as specified in 19-17-108(3) for volunteer
6 firefighters or completed the number of training hours prescribed by the state board of medical examiners for
7 emergency care providers. (Subsection (3)(o) (3)(p) terminates June 30, 2025--sec. 10, Ch. 47, L. 2023;
8 subsections (3)(n), (8), and (9) terminate December 31, 2033--sec. 4, Ch. 650, L. 2023.)"
9
10 NEW SECTION. Section 2. The department of revenue shall update the subtraction
11 amount in 15-30-2120(3)(o) for a qualified volunteer firefighter or volunteer emergency care provider pursuant
12 to 15-30-2120(7) by making the inflation adjustment applicable to income tax years beginning after December
13 31, 2026.
14
15 NEW SECTION. Section 3. [This act] is effective January 1, 2026.
16
17 NEW SECTION. Section 4. [This act] applies to income tax years beginning after
18 December 31, 2025.
19 - END -