Montana's elderly homeowner credit counts tax-free pension income that MCA 15-30-2337(9)(b) leaves out #10802

PolicyEngine adds tax_exempt_pension_income to Montana's gross household income for the elderly homeowner or renter credit, in all three blocks of gov.states.mt.tax.income.credits.elderly_homeowner_or_renter.gross_income_sources (2009, 2017 and 2023).

Under MCA 15-30-2337(9)(a)(i), Montana counts "the amount of any pension or annuity", and under (9)(b) it reduces that income: "For the purposes of this subsection (9), income is reduced by the taxpayer's basis." In its 2025 Schedule 2EC line 5 instructions, Montana's Department of Revenue tells filers to leave two tax-free amounts out of pensions and annuities: "do not include any nontaxable rollovers and your cost or net investment".

tax_exempt_pension_income holds tax-exempt pension income as one amount, so the list counts any rollovers and returned contributions that input holds. #10722 leaves the tax-free part of railroad annuities out of the same list under (9)(b).

To fix it, split rollovers and cost recovery out of tax-exempt pension income and leave only those out. MCA 15-30-2337(9)(b) reads the same in the 2009 code, so the fix applies to all three blocks.

Sources:

• MCA 15-30-2337, subsection (9)
• MCA 15-30-2337 (2009)
• 2025 Montana Form 2 instructions, Schedule 2EC line 5