Committee Includes Social Security Income Tax Cut In State Budget
A tax cut on social security income passed by both the state House and Senate is moving forward. The House Appropriations Committee voted Thursday to include the tax cut in the state budget.
The priority bill for Senate Republican leadership would create significant changes in the amount of social security income that’s exempted when filing Montana tax returns.
SB 217 would raise the bar for when social security income is taxable for individual filers from the current $25,000 to $30,000.
It would also raise the threshold for individuals filing jointly and married individuals filing separately.
The bill’s sponsor, Sen. David Howard, a Republican from Park City, says Montana is one of 13 states in the country that tax social security income.
“There’s a total of around 115,00 seniors that pay some sort of income tax in Montana, this will affect about 30,000 of them.”
The federal government also taxes some social security income once a person’s total income hits a certain level.
The Montana Department of Revenue opposes the bill out of concern for the possible loss of state revenue.
Several Democrats, including Rep. Marilyn Ryan from Missoula, expressed concerns about what state programs might not get funded because of this loss of revenue to the state.
“It sounds like a good idea to reduce my personal taxes, that’s a good thing for people. But where is this money going to come from? I don’t see any revenue bills coming that's going to make up for this.”
According to the Governor’s Office of Budget and Program Planning, the tax cut on social security income could result in a nearly $19 million loss in state revenue through fiscal year 2020, with even more potential financial losses as the state’s population continues to age.