Gianforte signs third income tax reduction bill of his administration
Montana Gov. Greg Gianforte signs House Bill 337 into law, giving Montanans a $756 million income tax cut over the next four years. (Micah Drew/Daily Montanan)
Surrounded by three dozen Republican lawmakers on the steps of the Montana capitol, Gov. Greg Gianforte on Monday signed into law a bill cutting income taxes — the third reduction over the five years of his administration.
House Bill 337, sponsored by House Speaker Brandon Ler, R-Savage, lowers Montana's top tax rate by .5% over two years, expands the eligibility threshold for filers to pay the state's lower tax rate, and doubles the Earned Income Tax Credit.
'Once again this legislative session, we're putting money back in Montanan's pockets through permanent, long term tax reductions, and we couldn't have done it without the legislators that are here with me today,' Gianforte said before affixing his signature to the new law.
Calling it the 'largest tax cut in Montana's history,' Gianforte said decreasing the top tax rate was a step closer to his goal of having a single, flat rate in the state, which he said will make the state more friendly to businesses and individuals.
'We still have the highest income tax rate in the region and one of the highest in the nation. It's a drag on our economy, a wet blanket on job creation and a burden on Montana families,' Gianforte said.
While the governor focused most of his remarks on the reduction of the top tax rate from 5.9% to 5.4% over the next biennium, Ler remarked that the bill's 'real power comes from how we've restructured the entire system.'
The threshold where Montana filers move between the state's two income brackets is substantially raised under the new law — essentially tripling the income individuals and joint filers can earn before paying a higher rate. The law also doubles the state's earned income credit, which targets the state's lowest earners.
'This is reform that reaches everyone,' Ler said. 'We didn't get here overnight. This bill is a result of careful policy work and a clear vision that is a shared belief that Montanans deserve a tax code that works for them, not against them.'
The three changes made to the state's tax structure will reduce the revenue flowing to the state's general fund by roughly $756 million by fiscal year 2029, according to a fiscal analysis of the legislation, which was a major sticking point for detractors.
Sen. Dave Fern, D-Whitefish, said the bill was 'well meaning, but it's just too expensive,' during debate on the Senate floor. Fern brought his own income tax bill aimed at lower and middle class earners that carried a lower fiscal note but didn't make it through the House.
The bill passed both chambers with all Democrats in opposition on their initial votes, and just two Democrats voting for the bill overall.
'Government does not exist to give tax cuts to people who do not need them. Government exists to fund schools, fix roads, and provide public safety. Democrats do not support robbing people of essential services to pay for tax cuts for people who absolutely do not need them,' House Appropriations Committee Vice Chairperson Rep. Mary Caferro, D-Helena, said in a press release. 'The public is not crying out for more tax cuts for people at the top.'
Gianforte proposed an even larger tax break in his budget last November, which would have cut the top tax rate by a full percentage point without adjusting the lower rate threshold. The new law emerged as a compromise between the governor's plan and one championed by the conservative wing of the senate.
'I've heard loud and clear from Montanans in every corner of our state, income tax relief is a top priority, and I'm incredibly proud of each person up here for helping deliver that needed relief,' Gianforte said.
The Legislature wrapped up its 83rd day in Helena on Monday, and is expected to adjourn later this week after the final details are hammered out on a package of property tax relief proposals.
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