Montana Tax Simplification Changes Now in Effect

Montana taxpayers preparing their 2024 tax returns will notice the impact of Senate Bill 399, which was passed by the 2021 Legislature. The bill simplifies the state’s tax system by aligning it more closely with the federal system, meaning Montana taxable income now begins with federal taxable income.

As part of the changes, certain deductions and subtractions have been eliminated, including those for specific tips and the 100% medical insurance premium deduction. However, new deductions have been introduced, such as a $5,500 subtraction for taxpayers aged 65 and older.

To help taxpayers adjust, the Montana Department of Revenue updated its wage withholding tables, which are used by employers and payroll providers to determine state income tax withholdings. Employers were also asked to encourage employees to update their MW-4 (Montana Employee’s Withholding Allowance and Exemption Certificate) forms.

These tax changes could affect your overall tax liability, even if your income remains the same. This, along with the new withholding adjustments, may impact your refund or the amount of tax due. The Department of Revenue advises individuals to review their wage withholding to ensure accuracy.

By: DNU staff