Montana Partial Retirement Disability Income Exemption for Taxpayers Under Age 65
Montana offers a partial exemption for certain disability retirement income for taxpayers under age 65. This exemption is designed to provide relief to individuals who receive retirement income due to disability and are not yet eligible for full retirement benefits.
Eligibility Criteria
- Taxpayer must be under age 65.
- Must receive disability retirement income (e.g., from military or other qualifying programs).
- Must meet Montana residency requirements.
How the Exemption Works
The exemption allows taxpayers to exclude a portion of their disability retirement income from Montana taxable income. The amount exempted is calculated as 50% of the taxable military retirement income, as specified in Form WMRE.
For military retirees, the exemption is applied as follows:
- Calculate taxable military retirement income.
- Multiply that amount by 50% (0.50).
- Enter the result on Form 2, Schedule I, Part I, line 13.
For military survivor benefits, the same 50% exemption applies. The amount is calculated by multiplying the taxable survivor benefits by 50% and entered on the same line of Form 2.
Required Forms and Documentation
- Form WMRE – Montana Working Military Retirement and Survivor Benefit Exemption: Used to calculate and claim the exemption. Must be attached to Form 2.
- Form 2 – Montana Individual Income Tax Return: The main tax return form where the exemption is reported on Schedule I, Part I, line 13.
Important Notes
- The exemption is only available for military retirement or survivor benefits. Other types of disability income may not qualify unless specifically allowed by Montana law.
- Taxpayers must file Form WMRE with their Form 2 to claim the exemption.
- The exemption does not apply if the taxpayer did not earn any Montana source income from employment, business, or farming (for military retirees).
Source:
Montana Working Military Retirement and Survivor Benefit Exemption (Form WMRE)
Montana Individual Income Tax Return Form 2 Instructions
Disclaimer: Always verify details with the official Federal or State Department of Revenue Forms and Instructions.