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Death & Survivor Benefits

Montana Subtraction for Military Survivor Benefits

Up to half of a Survivor Benefit Plan annuity comes off Montana taxable income, and unlike the retiree’s version it is not capped at the survivor’s Montana wage income. The same five-year and residency conditions apply.

Also called: SBP, survivor benefit plan, annuity, 15-30-2120, income tax, survivor, 50 percent.

For: Survivor.

Where it applies

Written for the jurisdictions listed here.

Section 15-30-2120(3)(n)(ii) lets a Montana taxpayer subtract up to 50 percent of all income received as survivor benefits for military service, for a retiree of the armed forces, the Montana Army or Air National Guard, the Guard of another state, or any reserve component. The important point is what does not apply to it. The Montana source wage income cap in subsection (8) is written to govern "the subtraction in subsection (3)(n)(i)", which is the pension subtraction. It does not reach (3)(n)(ii). A surviving spouse with no Montana earnings still gets the full 50 percent of the annuity, where a living retiree in the same position would get nothing. That asymmetry is in the drafting and it works in the survivor's favour. Everything in subsection (9) does apply. The survivor must either have become a Montana resident on or after June 30, 2023, or have been a resident before beginning to receive the annuity and remained one. It runs for five consecutive years and then stops. It is unavailable to someone who claimed it and then left the state. This is a Survivor Benefit Plan style annuity, paid on the deceased member's service. Dependency and Indemnity Compensation is a different thing: DIC is not taxable federally, does not enter federal taxable income, and so never reaches a Montana subtraction. A survivor with no veteran on the household account can read this entry on its own. No disability rating is involved.

Thresholds

Thresholds for Montana Subtraction for Military Survivor Benefits
GateRule
No Montana wage income cap on the survivor versionThe lesser-of cap in 15-30-2120(8) is written to apply to the pension subtraction in (3)(n)(i) and does not reach the survivor benefit subtraction in (3)(n)(ii). A survivor with no Montana earnings still subtracts up to 50 percent.
The same residency and five-year conditionsThe survivor must have become a Montana resident on or after June 30, 2023, or have been a resident before the annuity began and remained one. The subtraction runs five consecutive years and is lost on becoming a nonresident.

Sources

Legislation

Law the tracker is watching for this entry. See the legislation tracker for every jurisdiction.

Ch. 586, L. 2025 (Senate Bill 93) Removed the 2033 termination date from the military retirement income subtraction

Catalog reconciledEnactedScope changed

Signed

  1. Introduced Done, , step 1 of 6
  2. In committee Done, , step 2 of 6
  3. Passed one chamber Done, , step 3 of 6
  4. Passed both chambers Done, , step 4 of 6
  5. Signed by the governor Done, , step 5 of 6
  6. In effect Done, , step 6 of 6

Expands benefits Removes the 2033 termination date from the military retirement income subtraction.

Senate Bill 104 of 2023 created the military pension subtraction with a termination date of December 31, 2033. Senate Bill 93 of the 2025 session removed that date, as the Revenue Interim Committee records in its November 2025 paper on veteran tax benefits. This is tracked because the repealed sunset is still being published: guidance written against the 2023 text, including the federal benefits libraries reviewed as recently as February 2026, tells a Montana veteran the exemption is scheduled to expire in tax year 2033. A veteran deciding where to retire on a ten-year horizon is being given a repealed condition.

Sponsor

  • John FullerRepublican, Senate, District 4

Touches Mont. Code Ann. § 15-30-2120

Also touches

Official record

Ch. 650, L. 2023 (Senate Bill 104) Created the Montana subtraction for military pension and survivor benefit income

Catalog reconciledEnactedProgram created

Signed Takes effect

  1. Introduced Done, , step 1 of 6
  2. In committee Done, , step 2 of 6
  3. Passed one chamber Done, , step 3 of 6
  4. Passed both chambers Done, , step 4 of 6
  5. Signed by the governor Done, , step 5 of 6
  6. In effect Done, , step 6 of 6

Expands benefits Lets a taxpayer subtract part of military retirement pay and up to half of military survivor benefits from taxable income.

Added 15-30-2120(3)(n), (8) and (9), letting a taxpayer subtract a portion of military pension or retirement income and up to 50 percent of military survivor benefits from federal taxable income, first available in tax year 2024. Almost every description of it as a 50 percent exemption is wrong in the same way: subsection (8) caps the pension subtraction at the lesser of 50 percent of the pension or the taxpayer’s Montana source wage income, so a retiree with no Montana earnings subtracts nothing. Subsection (9) also excludes anyone who became a Montana resident before June 30, 2023 while already drawing the pension, and limits the subtraction to five consecutive years. The survivor benefit subtraction in (3)(n)(ii) is not caught by the wage cap, which the drafting makes plain and which no summary mentions.

Sponsor

  • John FullerRepublican, Senate, District 4

Touches Mont. Code Ann. § 15-30-2120

Also touches

Official record

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Disclaimer

VetTOC is not affiliated with the U.S. Department of Veterans Affairs or the Department of Defense. Information is for reference only and is not an eligibility determination. Verify with VA, the relevant state or territory, or an accredited VSO.