Montanans of all income levels will see another reduction in their tax bills thanks to the tireless work of Governor Greg Gianforte and Republican legislative leaders. This year’s income tax cut reduces the top income tax rate from 5.9% to 5.4% over the next two years and increases the maximum income threshold for the state’s lower tax bracket.
That $750 million cut translates to the largest income tax cut in state history, the second time Governor Gianforte and Montana Republicans have achieved this feat.
“This historic income tax cut is a major victory that will make Montana an even more attractive state in which to live, work, and raise a family,” said Grover Norquist, president of Americans for Tax Reform. “By cutting tax rates and leaving money in the hands of taxpayers who earned it, Governor Gianforte is strengthening Montana’s economy and making the state more economically competitive.”
House Bill 337 reduces the state income tax rate to 5.65% in 2026 and further to 5.4% in 2027. In addition, it more than doubles the amount of income eligible for the lower 4.7% tax rate for both individuals and heads of households. This legislation provides substantial tax relief by allowing a greater portion of Montanans’ income to be taxed at a reduced rate.
Signing this legislation marks another step in Governor Gianforte’s pro-taxpayer agenda. Since taking office in 2021, he has consistently prioritized reducing the state’s top income tax rate, making it a cornerstone of his administration. Gianforte has enacted multiple rounds of Republican-supported tax reforms, replacing Montana’s seven-bracket income tax system with just two brackets and steadily lowering the top rate, which started at 6.9% when he first took office.
With a series of major tax cuts already behind him, Governor Gianforte remains focused on further reducing Montana’s income tax burden. “The reality is, even after our historic tax cuts in 2021 and 2023, we still have the highest income tax rate in the region and one of the highest in the nation,” noted Governor Gianforte at the bill signing ceremony. “Across the nation, Republican states are cutting their income tax rates. To stay competitive, we must do the same. Through House Bill 337, we’re much, much closer to a flat tax.”
Governor Gianforte is correct in prioritizing income tax reform. Despite recent progress, Montana continues to have one of the highest income tax rates in the Rocky Mountain West. Neighboring Wyoming and South Dakota levy no state income tax at all, while North Dakota and Idaho maintain comparatively lower top rates of 2.5% and 5.3%, respectively. While the latest reforms mark a meaningful step toward greater regional competitiveness, there is still work to be done.
States with low or no income taxes are far more appealing to families, businesses, and entrepreneurs, as they create an environment that fosters job creation, higher wages, and expanded opportunities. Most importantly, these policies empower hardworking Montanans to keep more of their own money.
The passage of House Bill 337 signals that Montana is once again a serious contender in the nationwide push to reduce – and ultimately eliminate – state income taxes. Neighboring Idaho recently enacted the largest income tax cut in its history under Governor Brad Little. In Mississippi, Governor Tate Reeves has implemented a flat 3% rate, with triggers in place to phase out the tax entirely. Missouri’s Governor Kehoe, alongside legislative leaders, is pursuing full elimination through revenue triggers, while Kansas is moving from a 5.58% rate to a flat 4% after overriding Governor Laura Kelly’s veto. Across the country, lawmakers in at least ten states are actively pursuing additional income tax relief, continuing a growing trend of pro-growth tax cuts.
