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JD

Bill

HB 845

Increase IRC 529 education savings income tax deduction

2025 Regular Session Introduced by Julie Darling

Montana increases its state income tax deduction for 529 education savings plan contributions, providing tax incentives for households saving for college expenses.

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Bill Summary · HB 845

Legislative bill overview

HB 845 increases Montana's income tax deduction for contributions to IRC Section 529 education savings plans, making it more attractive for families to save for higher education expenses through tax-advantaged accounts. The bill has already been signed into law by the Governor as of May 13, 2025.

Why is this important

This change directly affects household finances by allowing Montana residents to reduce their state taxable income by larger amounts when funding 529 plans, effectively subsidizing education savings through foregone tax revenue. The policy aims to encourage families—particularly middle and upper-income households—to save for college, which can reduce reliance on student loans and increase educational access.

Potential points of contention

  • Regressive benefit distribution: The tax deduction primarily benefits higher-income households who have capacity to save; lower-income families may see little to no benefit
  • State revenue impact: Increased deductions reduce state tax collections, potentially requiring cuts to other programs or tax increases elsewhere
  • Complexity and awareness: Many eligible families may not utilize the deduction due to lack of awareness or complexity in claiming it on tax returns

Compiled from official sources — confirm details with the bill’s official record.

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