[MaxGhenis]

What was wrong

Montana's age-65 subtraction parameter (gov.states.mt.tax.income.subtractions.old_age.amount) held $5,500 for 2024 and $5,660 for 2025, with no 2026 value and no uprating. So PolicyEngine-US applied 2025's $5,660 in 2026. The statute indexes the amount every year, and for 2026 it gives $5,810.

The law

MCA 15-30-2120 (MCA 2025):

(3) … the following are subtracted from federal taxable income: […] (g) for each taxpayer that has attained the age of 65, an additional subtraction of $5,500;

(7) (a) By November 1 of each year, the department shall multiply the subtractions from federal taxable income in subsections (3)(g) and (3)(o) by the inflation factor for that tax year for a taxpayer that either: (i) has attained the age of 65; or (ii) is a qualified volunteer firefighter or volunteer emergency care provider. (b) The department shall round the results in subsection (7)(a) to the nearest $10. The resulting amounts are effective for that tax year and must be used as the basis for the subtraction from federal taxable income determined under subsections (3)(g) and (3)(o).

MCA 15-30-2101:

(1) "Consumer price index" means the consumer price index, United States city average, for all items, for all urban consumers (CPI-U), using the 1982-84 base of 100, as published by the bureau of labor statistics of the U.S. department of labor.

(12) "Inflation factor" means a number determined for each tax year by dividing the consumer price index for June of the previous tax year by the consumer price index for June 2023.

BLS CPI-U, U.S. city average, all items, not seasonally adjusted (CUUR0000SA0): June 2023 305.109, June 2024 314.175, June 2025 322.561.

Tax year	Inflation factor	$5,500 x factor	Rounded to nearest $10	PolicyEngine-US
2024	305.109 / 305.109 = 1	5,500.00	5,500	5,500 (unchanged)
2025	314.175 / 305.109 = 1.029714	5,663.43	5,660	5,660 (unchanged)
2026	322.561 / 305.109 = 1.057199	5,814.60	5,810	5,660 before, 5,810 after

The formula reproduces the Department's published 2025 amount (2025 Montana Tax Tables and Deductions: "65 and over exemption $5,660"), so the Department applies it as written. The 2026 rounding has no edge: 5,814.60 sits $4.60 from 5,810 and $5.40 from the $5,815 midpoint.

The change

• parameters/gov/states/mt/tax/income/subtractions/old_age/amount.yaml: adds 2026-01-01: 5_810, with the CPI computation for each year in comments, and cites 15-30-2101 and the BLS series. The 2024 and 2025 values don't change.
• tests/.../mt/tax/income/subtractions/mt_old_age_subtraction.yaml: seven new cases (below).
• source_conflicts/candidates.yaml: candidate us-mt:age-65-subtraction-2026-indexed-amount (step 1 of CONTRIBUTING.md#source-conflicts).
• changelog.d/fix-mt-age-65-subtraction-2026.fixed.md.

Reading taken: statute over the 2026 Publication 1

The Department's 2026 Publication 1 (its estimated tax guide, created November 20, 2025; PDF page 11, printed page 9) lists "A subtraction of $5,660 for taxpayers 65 and older", the 2025 figure. This PR follows the statute, under the statute-first rule in CONTRIBUTING.md#source-conflicts:

• (7) fixes the amount by formula and leaves the Department nothing to choose but the rounding, and the formula gives $5,810.
• The same Publication 1 list prints the 529 cap at its unindexed "$4,500 per individual", although 15-30-2120(11) indexes it "for each tax year after 2025" (4,500 x 322.561 / 314.175 = 4,620, or $4,600 to the nearest $100). So the list carries earlier amounts forward; its $5,660 reads as the 2025 figure, not a 2026 computation.
• The Department's January 2026 notice gives the new volunteer firefighter subtraction ((3)(o), which the same (7) indexes) as $3,000 for 2026 and says "For future years, the amount is adjusted for inflation." That subtraction starts in 2026, so the notice says nothing about the age-65 amount, which the Department has indexed since 2025.
• As of November 11, 2026 the Department has published no 2026 tax tables page (the index lists 2021-2025) and no 2026 Form 2 instructions.

The candidate records the conflict for the shared register; after this merges, the register entry and the deciding-line marker follow as CONTRIBUTING.md's steps 2 and 3 describe.

Invariants and how the tests check them

• Earlier years don't move. This PR leaves the 2024 ($5,500) and 2025 ($5,660) values alone. The existing 2024 cases pass unchanged, and two new 2025 cases (a 65-year-old, and the couple below in 2025: federal taxable income $17,900, Montana taxable income $6,580, tax $309.26) pass before and after this change.
• Each 2026 amount equals the statutory computation. $5,500 x CPI-U June 2025 / CPI-U June 2023, rounded to the nearest $10, is $5,810; the cases check $5,810 per filer aged 65 or older, $11,620 for two, and $0 at 64. The same formula with June 2024 CPI-U reproduces the Department's $5,660 for 2025.
• Only aged filers move. The 2026 cases at age 64 (a variable case, and a single filer with $40,000 of pension: tax $1,123.30) give $0 subtraction before and after.

New cases (expected values computed by hand from the statute, Rev. Proc. 2025-32 and IRC 86 and 151(f)):

Case	Year	Federal taxable income	Age-65 subtraction	Montana taxable income	Montana tax
Age 65	2025	n/a	5,660	n/a	n/a
Age 65	2026	n/a	5,810	n/a	n/a
Age 64	2026	n/a	0	n/a	n/a
Couple 67 and 65: $45,000 pension, $30,000 Social Security	2026	17,100	2 x 5,810	5,480	257.56
Same couple	2025	17,900	2 x 5,660	6,580	309.26
Single, 70, $40,000 pension	2026	15,850	5,810	10,040	471.88
Single, 64, $40,000 pension	2026	23,900	0	23,900	1,123.30

The couple's federal taxable income: IRC 86 makes $19,600 of the $30,000 of benefits taxable (provisional income $60,000), so AGI is $64,600; less the $32,200 joint standard deduction, 2 x $1,650 aged additions and 2 x $6,000 senior deductions, $17,100. Montana keeps the senior deduction in its base (2025 Form 2 instructions, PDF p. 6).

Against main's parameter, the three 2026 cases with an aged filer fail (the subtraction comes out $5,660 per filer) and the other seven pass. A reform that sets 2026 back to $5,660 gives the couple Montana taxable income of $5,780 and tax of $271.66. This change touches one parameter value, so the YAML cases cover the invariants; a property-based test would only restate the parameter.

Test plan

• YAML tests with expected values from the statute, BLS CPI-U, Rev. Proc. 2025-32 and IRC 86 and 151(f), computed by hand.
• Source conflict: candidate us-mt:age-65-subtraction-2026-indexed-amount (step 1). The register entry and the # Source conflict marker follow after merge (steps 2 and 3).
• make format: not applicable, since the PR changes no Python files.
• Changelog fragment in changelog.d/.

Local runs: mt_old_age_subtraction.yaml 10 passed (7 new); against main's parameter, 3 failed and 7 passed. The mt/tax/income/subtractions folder with mt_taxable_income_joint.yaml, mt_income_tax.yaml, mt_claim_of_right_deduction.yaml and the elderly credit rebate cases: 122 passed. test_source_conflicts.py: 103 passed.

Before and after for one household

A 2026 Montana couple aged 67 and 65 with $45,000 of pension and $30,000 of Social Security (federal taxable income $17,100, no Montana earnings):

	Before	After
Age-65 subtraction	2 x $5,660 = $11,320	2 x $5,810 = $11,620
Montana taxable income	$5,780	$5,480
Montana income tax (4.7%)	$271.66	$257.56

Not in this PR

• Years after 2026. The parameter still holds its last value forward; 2027's amount follows from June 2026 CPI-U by the same formula.
• The military retirement exemption and subtractions.yaml (Model Montana's working military retirement and survivor benefit exemption #10713).

axiom: TheAxiomFoundation/rulespec-us#2162 queued

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