The 68th Montana Legislative made several changes to Montana’s tax laws. To help you sort out the changes, we are starting a series explaining the new laws called the 2023 Legislative Roundup.
This post is a part of our 2023 Legislative Roundup series.
A Montana Medical Care Savings Account (MSA) is a savings account that allows Montana residents to save for medical expenses while reducing their income tax. In 2023, taxpayers may contribute up to $4,500 to an MSA for use toward the cost of medical expenses allowed as a federal deduction, as well as for long-term care insurance, annuity, and care expenses of the account holder; family leave expenses; and expenses paid to administer the account. The amount of the contribution into the account as well as any earnings on the account are excluded from Montana taxable income.
The tax deduction for MSAs was set to expire on January 1, 2024. However, it was revived by Senate Bill 550; the bill extended the deduction’s availability to taxpayers beyond the current tax year. Additionally, the bill changed the deduction amount calculation. Previously, the contribution limit was adjusted for inflation and rounded to the nearest $500 increment. Beginning in 2025, the contribution limit and tax deduction will be adjusted for inflation and rounded to the nearest $100 increment. Finally, the bill also allowed for funds in the account to be used to pay for direct patient care payments and healthcare sharing ministry fees.
For 2024, the contribution limit and tax deduction is $4,500.
More information about MSAs is available on our website.