Montana lawmakers will take another crack at changing how the state collects taxes on Social Security income. A similar proposal was vetoed by Democratic Gov. Steve Bullock.
Republican Rep. Paul Fielder of Thompson Falls is carrying House Bill 162, which would eliminate the state income tax on social security income.
“I think this bill protects a lot of elderly taxpayers, regardless of their income, so that they can keep a larger share of what they've earned throughout their life," he said.
H.B. 162 is similar to a 2019 bill carried by Republican Sen. David Howard that pitched an expansion of the tax exemption on social security income. The bill came with a projected $19 million cut to state coffers and made it all the way to the governor’s desk last session before being vetoed.
Fielder’s bill goes further than that. It would eliminate social security as a taxable income and is projected to cut state revenue by nearly $100 million each year.
Erik Burke with the Montana Federation of Public Employees spoke in opposition to the bill.
“House Bill 162 would drastically change the revenue base in the state of Montana, that would have drastic impacts on the budget you are all trying to draft."
Advocacy groups for Montana seniors, low-income women and families, and a union for public employees asked the committee to reject the bill, saying it could lead to cuts in state services.
According to an analysis from the left-leaning Montana Budget and Policy Center, more than two-thirds of the proposed tax cut would go to the wealthiest 20% of households. That’s because low-income residents already see tax breaks on their social security income.
Other than Fielder, the bill’s sponsor, one person spoke in support of the bill during its first hearing Thursday.
Republicans and Democrats are pushing a variety of tax reform measures this session, some that contradict one another. Republican Gov. Greg Gianforte has said he wants to reduce taxes, meaning policies that have failed in the past may have a better chance now of passing.