Montana has made the following changes to the tax laws for the 2021 tax year:
What changes were made to Form 2?
- CARES Act changes - Several changes were made relating to Net Operating Los, excess business loss limitations, and charitable contributions. The Montana forms and instructions have been updated to reflect these Federal changes.
- Partial Pension, Annuity, and IRA Exemption Worksheet - The worksheet on page 6 was renamed and streamlined in order to make the form easier to understand and complete.
What other changes were made for 2021?
- Reporting Federal Adjustments - House Bill 53 increased the amount of time you have to amend your Montana state return after any federal adjustments. You now have 180 days to file an amended return after any federal adjustments have been finalized.
- Family Education Savings Accounts - Individuals can now use their Montana Family Education Account funds on broader range of education expenses. To see a full list of eligible education expenses, please see line 17 of Montana Subtractions Schedule.
- Trades Education and Training Credit - Employers can now take a credit for the expenses incurred while training and educating employees for a trade profession. The credit is worth up to 50% of the cost of qualifying trade training expenses or education. This credit cannot exceed $2,000 per employee.
- Mobile Home Park Capital Gain Exclusion - One hundred percent of the capital gain earned from the sale of a mobile home park is now excludable from Montana Adjusted Gross Income.
- Montana Medical Savings Account (MSA) Investment Options - Montana MSAs are now able to be invested in stocks, bonds, mutual funds, a combination of both. You may also invest your Montana MSA in an account that is allowable for a federal Health Savings Account (HSA).
- Montana Entrepreneur Magnet Act - According to the Montana Form 2 instructions, "beginning in Tax Year 2026, the net long-term capital gain or exchange of certain capital stock will not be subject to tax. The exclusion is not available until Tax Year 2026, but some requirements take effect starting in 2021. In order to be eligible, the sale or exchange of the stock must be from a corporation that, prior to the sale or exchange of the stock, has:
- at least 60 consecutive months of new business activity in Montana beginning on or after January 1, 2021,
- more than half of its officers residing in the state for the previous 36 months,
- at least 30% of its employees residing in the state for the previous 12 months, and.
- at least 25 full-time employees residing in the state for the previous 36 months."