Major income tax cut heads to Montana governor's desk
A major income tax cut that would reduce state revenues by an estimated $267 million a year by 2028 cleared the Montana Legislature on Tuesday, passing a final vote in the Senate to head toward the desk of Republican Gov. Greg Gianforte.
House Bill 337, sponsored by Speaker of the House Brandon Ler, R-Savage, scales back the state's top-bracket tax rate over the next two years while extending a lower-bracket rate to higher incomes. It passed on near-party line votes, with support from all Republicans and opposition from nearly all Democrats.
Advocating for the bill during a hearing before the Senate Taxation Committee on April 9, Ler argued the legislation would produce an income tax cut across the income spectrum.
'That means giving the populace more money and not having more money up here in state government,' Ler said.
Opponents had worried that continuing to scale back income taxes, the state's primary revenue source, will eventually make it harder to cover the cost of public services. They also argued the lion's share of the savings will go to high-income earners.
'It doesn't target the Montanans who actually need it, who are the lower- and middle- income Montanans,' Senate Minority Leader Pat Flowers, D-Belgrade, argued as the bill was debated on the Senate floor April 18.
According to the Montana Budget and Policy Center, a Helena think tank that typically advocates for progressive tax policy and opposed HB 337, about two-thirds of the bill's savings will go to the wealthiest 20% of taxpayers.
Higher-income taxpayers also pay a greater share of state taxes under current law. According to figures from the Montana Department of Revenue, the highest earning 20% of individual taxpayers reported 64% of the state's taxable income and paid 70% of state income taxes collected in 2023.
Gianforte has made repeated pushes to reduce the state's top-bracket income tax rate a centerpiece of his policy agenda since he took office in 2021 and has signed multiple rounds of Republican-backed income tax cuts that have reduced that rate from 6.9% to the current 5.9%. He routinely argues that lower income taxes will bolster Montana's economy by making it a more competitive destination for entrepreneurs.
The Ler bill implements a slightly smaller cut than the one initially included in Gianforte's pre-session budget proposal, which would have implemented a phased cut to the top-bracket tax rate, ultimately reducing it 4.9%. A fiscal analysis concluded that proposal would have reduced state revenues by about $304 million a year by 2028.
Instead, Ler's proposal would drop the top-bracket rate to 5.65% in 2026 and then 5.4% in 2027, also phasing in the cut. Unlike the Gianforte proposal, it would also apply a current lower-bracket 4.7% rate to higher incomes, raising the threshold where that lower marginal rate is replaced with the top-bracket one from $21,000 to $47,500 for individual taxpayers. That threshold is doubled for married couples who file joint tax returns.
For an individual filer earning $50,000 a year and claiming a $15,000 standard deduction — therefore with $35,000 in taxable income — the Ler bill would result in $167 in annual savings once fully implemented, according to MTFP calculations. For an individual filer earning $200,000 a year and taking that same standard deduction, the annual savings would be $1,004.
The Gianforte proposal, in comparison, would have saved that $50,000 taxpayer slightly less, $139 a year and that $200,000 taxpayer substantially more, $1,639 a year.
The Ler bill also includes a portion of the governor's proposal that would expand a state Earned Income Tax Credit available to lower-income working families starting next year, doubling it from 10% to 20% of an analogous credit available in the federal tax system. That increase would represent a relatively small share of the bill's overall price tag, about $38 million a year.
Other major income tax bills proposed this session have stalled.
Senate Bill 323, brought by Sen. Josh Kassmier, R-Fort Benton, to implement the governor's proposal, stalled in its initial Senate committee earlier this month. Another major income tax cut bill, Billings Republican Sen. Mike Yakawich'sSenate Bill 203, passed the Senate but was tabled by the House Taxation Committee on April 16.
Income taxes are the major source of funding for Montana's state government. Montana property tax collections, in comparison, almost exclusively flow to fund local services.
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This story was originally published by Montana Free Press and distributed through a partnership with The Associated Press.
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Politico
28 minutes ago
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Democrats eyeing a presidential bid scramble to un-woke themselves
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'If one child is trying to figure out their pronoun, I accept that, but the rest of the class doesn't know what a pronoun is and can't even define it,' Each of these candidates are, either deliberately or tacitly, countering a perceived weakness in their own political record or party writ large—Emmanuel, for example, has called the Democratic Party 'weak and woke'; Sen. Elissa Slotkin (D-Mich.) has said the party needs more 'alpha energy'; others like Newsom are perhaps acknowledging a more socially liberal bent in the past. On diversity, equity, and inclusion, some in the party are also sending a signal they're no longer kowtowing to their left flank. Former Transportation Secretary Pete Buttigieg removed his pronouns from his social media bio months ago, and questioned how the party has communicated about it. 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Jared Golden (D-Maine) and Marie Gluesenkamp Perez (D-Wash.), described as 'legends of the moderate community,' and included a presentation by center-left data guru David Shor, who has urged Democrats to shed toxic positions like 'defund the police.' Adam Frisch, the former congressional candidate and director of electoral programs at Welcome PAC, said his party is 'out of touch culturally with a lot of people.' 'I think a lot of people are realizing, whether you're running for the House, the Senate, or the presidential, we better start getting on track with what I call the pro-normal party coalition,' Frisch said. 'You need to focus on normal stuff, and normal stuff is economic opportunity and prosperity, not necessarily micro-social issues.' Then there is Newsom, the liberal former mayor of San Francisco, who has also distanced himself from so-called woke terminology and stances. The governor claimed earlier this year that he had never used the word 'Latinx,' despite having repeatedly employed it just years earlier and once decrying Republicans who've sought to ban the gender-neutral term for Latinos. Newsom made the claim on his podcast episode with conservative firebrand Charlie Kirk — one of several MAGA personalities the governor has hosted on the platform in recent months. 'I just didn't even know where it came from. What are we talking about?' Newsom told Kirk. The governor, who gained national notoriety in 2004 for defying state law and issuing marriage licenses to same-sex couples in San Francisco, has also pivoted on some LGBTQ+ issues. Newsom broke with Democrats this spring when he said, in the same podcast episode with Kirk, that he opposes allowing transgender women and girls to participate in female college and youth sports. 'I think it's an issue of fairness, I completely agree with you on that. It is an issue of fairness — it's deeply unfair,' Newsom said, a comment that was panned by many of his longtime LGBTQ+ supporters and progressive allies. Newsom for months has also muted his tone on immigration issues, avoiding using the word 'sanctuary' to describe a state law that limits police cooperation with federal immigration authorities even as he defends the legality of the policy. The governor is proposing steep cuts to a free health care program for undocumented immigrants, which comes as California faces a $12 billion budget deficit. In recent days, however, he joined a chorus of California Democrats criticizing Trump administration immigration efforts in his state. Moore, who recently trekked to South Carolina, vetoed legislation that would launch a study of reparations for the descendants of slaves from the Democratic-controlled legislature. Moore urged Democrats not get bogged down by bureaucratic malaise and pointed to the Republican Party as the reason why. 'Donald Trump doesn't need a study to dismantle democracy. Donald Trump doesn't need a study to use the Constitution like it's a suggestion box,' he told a packed dinner of party power players. 'Donald Trump doesn't need a white paper to start arbitrary trade wars that will raise the cost of virtually everything in our lives,' Moore said. There are some notable exceptions to the party's border pivot to the center. Govs. Andy Beshear of Kentucky, JB Pritzker of Illinois and Tim Walz of Minnesota haven't shied away from social issues. Beshear, who has vetoed several anti-LGBTQ+ bills, including during his own reelection year, attacked Newsom for inviting conservative provocateurs Steve Bannon and Charlie Kirk onto his podcast. He also drew a distinction with Newsom on transgender athletes playing in youth sports, arguing that 'our different leagues have more than the ability to make' sports 'fair,' he told reporters in March. 'Surely, we can see some humanity and some different perspectives in this overall debate's that going on right now,' Beshear added. The Kentucky governor said his stance is rooted in faith — 'all children are children of God,' he often says. Walz called it 'a mistake' to abandon transgender people. 'We need to tell people your cost of eggs, your health care being denied, your homeowner's insurance, your lack of getting warning on tornadoes coming has nothing to do with someone's gender,' he told The Independent last month. Pritzker, too, recently said that it's 'vile and inhumane to go after the smallest minority and attack them.' This spring, Pritzker declared March 31 as Illinois' Transgender Day of Visibility. 'Walz, [Sen. Chris] Murphy, Pritzker, Beshear — they're not going around talking about it all the time, but they're also not running away from their values,' said one adviser to a potential 2028 candidate granted anonymity to discuss the issue candidly. 'They're in the both-and lane.' The party's reckoning with social issues is far from over. In 2021, then-Pennsylvania Attorney General Josh Shapiro vocally opposed a GOP bill that aimed to ban trans athletes from participating in women's school sports, calling it 'cruel' and 'designed to discriminate against transgender youth who just want to play sports like their peers.' This year, as the state's Republican-controlled Senate has passed a similar bill with the support of a handful of Democrats, Shapiro has remained mum on the legislation. It's not likely to come up for a vote in the state's Democratic-held House, so he may be able to punt — at least a while. As Emmanuel sees it, his party has a long way to go to over-correct for what he paints as the excesses of the last few years. 'The core crux over the years of President [Joe] Biden's tenure is the party on a whole set of cultural issues looked like they were off on a set of tangential issues,' Emmanuel said. Dasha Burns, Dustin Gardner, Holly Otterbein, and Brakkton Booker contributed to this report.
