NewsMontana Legislature


Montana Legislature considers reducing tax rate on veteran pensions

Posted at 9:49 AM, Feb 04, 2023
and last updated 2023-02-04 11:53:28-05

BILLINGS — How to tax veterans' pensions is a question in front of lawmakers in Helena again this session.

Reducing the tax could mean millions of dollars of lost revenue for the state, but Montana business policy advocates say it is an opportunity to attract a highly-skilled workforce to the state.

Dan Brooks, Billings Chamber of Commerce business advocacy director, sees retired veterans as an untapped resource that Montana has a huge potential of developing.

"One of these things we hear from our businesses often is because of low unemployment, they have difficulties finding the workforce they need to help their businesses grow," said Brooks, a veteran himself.

Brooks and other business policy experts across Montana see a path to attracting retired veterans to Montana through a pair of bills moving through the legislature, specifically HB 219 and SB 104, which would exempt 50% of a military pension from income tax.

It's an effort that's been carried before in Montana but does not have full support of Democrats and Republicans and has stalled out in past legislative sessions.

In 2021, a bill carrying this policy passed the House but died in the Senate.

The criticism of the effort is lost income to the state in income tax collection.

A fiscal analysis of SB 104 projects $8 million to $9 million of lost revenue a year for several years in a row.

But Brooks is optimistic the revenue could be found in attracting new employees and businesses to Montana.

"Along with our beauty and splendor of the countryside as an attraction for people to make it here, we want to give them this financial tax benefit here as well," Brooks said.

Brooks said Montana is one of three states that fully tax veteran retirement income.