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Social Security income tax bill sparks debate, narrowly moves forward

By Nicole Girten,


Representatives who would benefit from a bill to eliminate taxes on Social Security payments stand on the floor on March 14, 2023. (Photo by Nicole Girten/Daily Montanan)

Around 20 legislators stood up on the House floor Tuesday when Rep. Casey Knudsen, R-Malta, asked those who benefited from a bill that would strike taxes on Social Security income to rise and identify themselves. There were some chuckles and joking as standing clearly signified a legislators age and surely the number of those who stood don’t represent the true total number of those who would benefit.

House Bill 526 would repeal a state tax on Social Security income and would make Montana the 40th state to do so, sponsor Rep. Paul Fielder, R-Thompson Falls, said. This bill would apply to those with Social Security payments alongside other revenue streams like a pension or 401K, Fielder explained. The state would lose around $120 million a year in revenue, according to the fiscal note .

The bill received both bipartisan support and opposition, sparking debate on a bill Fielder also brought last session after it died in the Appropriations Committee. The bill might see a similar fate this session, with Chairman of the House Appropriations Committee Rep. Llew Jones, R-Conrad, voicing his opposition.

Jones explained that half of Social Security isn’t taxable because it was taxed when it was initially taken; he said the other half of Social Security, just like with a 401(k), is taxable because it went in tax free.

Meanwhile, Rep. Alice Buckley, D-Bozeman, pointed out that Montana does not have a sales tax, which other states that have passed these measures already have.

Jones also said the median income disparity between those under and over 65 was as much as $40,000, with new residents over 65 having an income over $84,000.

“We have a significant population that’s over 65. Those that already are only making Social Security, currently don’t pay tax,” he said.

Rep. Tom France, D-Missoula, came in as a strong supporter of the bill. France was one of those who stood as a beneficiary of the bill.

“All of the junior members could stand too because this is America’s safety net. This is what every senior, whether they’re working for a minimum wages or making much, much more than that, can count on as their retirement,” France said.

Minority Leader Rep. Kim Abbott, D-Helena, said this was a bad bill for the state.

“We are talking about 65% of the benefit of this going to the top 20% of wage earners in the state of Montana,” Abbott said. “Those aren’t people that really need a break.”

The bill passed 57-43 on second reading in the House, and it will need to pass third reading before likely going to House Appropriations.

The post Social Security income tax bill sparks debate, narrowly moves forward appeared first on Daily Montanan .

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