Are the Montana Property and Income Tax Rebates We Got Taxable?

Missoula, MT (KGVO-AM News) - Montanans are getting their taxes in order now that 2023 has given way to 2024.

KGVO News spoke to our ‘resident CPA’ Walt Kero on Wednesday’s Talk Back program about some of the changes Montanans will find when they prepare this year’s tax return.

Kero was asked if the rebates that Montanans received for both personal and property taxes are themselves taxable.

Walt Kero Answered Questions about our Property and Income Tax Rebates

“In tax law, if you got a benefit from a deduction or if you paid tax on income and you got a tax benefit one way or the other, if it reverses itself, then its income, but most people are not itemizing on their federal return,” began Kero. “If you don't itemize, then you're not getting a benefit from the property tax and income tax deduction.”

The Montana Department of Revenue said that 'your rebate is not subject to Montana's state income tax, and according to the IRS, for most individuals, the individual income tax rebate will not be included in Federal taxable income.'

Kero said the State Legislature Simplified Taxes for Montanans

Kero said tax simplification legislation was passed in the 2023 State Legislature, and provided one example of the new law.

“There are only going to be two rates in the tax tables 4.7 percent and 5.9 percent,” he said.” If you file married joint on the federal return, you're going to have to do that on the Montana return as well, and that's also a whole new change. For most people if you file jointly on your federal return then you save money by filing married separate on Montana. So that's old law and the new law is going to change that.”

Kero said so many Montanans asked for tax simplification that the 2023 Legislature passed new laws to do just that.

Going Forward there are only Two Tax rates 4.7 and 5.9 Percent

“Many existing tax deductions will go away because they're already incorporated into federal taxable income,” he said. “So, we have wanted (tax) simplification in Montana for years. Now we have it going forward, so our taxes in Montana will be simpler.”

Listen to the full two hour conversation with Walt Kero of Kero Byington and Associates by clicking here.

Kero appears about two times a month to provide answers to general tax questions from KGVO listeners.