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Thursday, February 1, 2018

News from the Montana Dept of Revenue on Tax Reform Changes

The Montana Department of Revenue and the Office of Budget and Policy Planning are reviewing the federal tax reform bill (HR1) and its potential impacts on Montana’s tax system. With HR1 being the most significant federal tax reform in 30 years it will take additional time to sort through the bill.
One key provision of HR1 establishes a 20 percent deduction of “qualified business income (QBI)” from certain pass-through businesses. The department has determined that the QBI deduction is not an eligible deduction for Montana individual income tax purposes.
Individual Income Tax Return Changes

We have made changes to our Form 2 for the new Federal Tax Reform. 

The following changes were made to the 2017 Montana Individual Income Tax Return (Form 2) due to the recently passed federal tax reform bill (HR 1):

  • The department voided and reserved for future use:
    • line 35 on Form 2 (Tuition and Fees)
    • line 14 (Qualified Mortgage Insurance Premiums) on Schedule III (Itemized Deductions) because these two federal provisions expired at the end of 2016.
  • Line 3 of Schedule III (Itemized Deductions) was updated to reflect the new limitation used to calculate allowable medical and dental expenses. Medical and dental expenses are allowed for tax year 2017 to the extent if they exceed 7.5% of the taxpayer adjusted gross income.