Vote Smart's Synopsis:

Vote to pass a bill that exempts military pensions from the state income tax.

Highlights:

• Amends section 62 of the Internal Revenue Code to include the following (Sec. 1):

• In the case of married taxpayers filing jointly, if both taxpayers are receiving pension or annuity income or if only one taxpayer is receiving pension or annuity income, the exclusion must be reduced by $2 for every $1 of federal adjusted gross income over $33,910 as shown on their joint return;

• Reduces up to 50 percent of all military pensions or military retirement income received by a retired member of:

• The armed forces of the United States;

• The Montana army national guard or the army national guard of other states;

• The Montana air national guard or the air national guard of other states; or

• A reserve component, as defined in 38 U.S.C. 101, of the United States armed forces.

• All benefits received under the workers' compensation laws;

• Specifies a taxpayer receiving retirement disability benefits who have not attained 65 years of age by the end of the tax year and who has retired as permanently and totally disabled may exclude from adjusted gross income up to $100 a week received as wages or payments instead of wages for a period during which the employees are absent from work due to the disability (Sec. 1-10).

• Exempts military pension income, military retirement income, and survivor benefits will be phased in as follows (Sec. 1-18):

• 10 percent is exempt in tax year 2021

• 20 percent is exempt in tax year 2022;

• 30 percent is exempt in tax year 2023;

• 40 percent is exempt in tax year  2024; and

• 50 percent is exempt in tax year 2025 and thereafter.

• Extends retroactively, within the meaning of 1-2-109, to military retirement or pension income or survivor benefits received after December 31 (Sec. 3).

Full Bill Text