Gov. Greg Gianforte used a Thursday press conference at the Capitol to preview the last full budget he will send to the Legislature, built around a 4.7% flat income tax and a larger cushion against a downturn.
The proposal, which he branded “Realizing the Montana Comeback,” would replace the state’s two remaining income tax rates with a single 4.7% rate and raise the state earned income tax credit from 20% to 30% of the federal credit. The governor’s office said those two changes would provide $220 million a year in permanent income tax relief. The full budget document is scheduled for Monday, ahead of the 2027 session.
Montana now taxes income at 4.7% and 5.4%, with the higher rate applying after $65,000 for single filers and $130,000 for joint filers, the Daily Montanan reported. Gianforte has already narrowed seven brackets to two and cut the top rate from 6.9% to 5.4% since taking office. “A flat tax is a fair tax. If you make more, you pay more. If you make less, you pay less. It’s that simple,” he said Thursday.
House Democrats, who are in the minority in both chambers, say the next cut would do little for most households. “The governor’s proposed flat tax does absolutely nothing for 80% of Montanans. For your average working Montanan, they will get literally not a dime,” House Minority Leader-elect SJ Howell said Wednesday, according to the Daily Montanan. Howell argued the savings would flow mainly to a few thousand of the state’s highest-earning households.
The plan would also lift the business equipment tax exemption from $1 million to $3 million. When Gianforte took office, that exemption was $100,000. He has said earlier increases already pulled more than 5,000 small businesses, farms and ranches off the tax.
To backstop the tax cuts, the budget would drop an additional $300 million of one-time money into the Budget Stabilization Fund, bringing it to about $900 million, a record. The governor also proposed doubling the Fire Suppression Fund. “We don’t want to be in a position where we can’t fulfill essential services,” he told reporters.
Other one-time items he highlighted include $125 million for the state highway trust, $100 million for county roads and bridges, $13 million for the school facilities trust, $14 million in bonuses for state employees, and a higher cap of $24 million on the Big Sky Scholarship. He also listed $25 million for a behavioral health fund, $10 million for local 911 systems, and $1 million in incentives for schools that keep cellphones out of classrooms.
Republican leaders in the Senate have backed the flat tax idea. The Legislature will write the final numbers after the full budget lands Monday.
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