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Montana has emerged as one of the nation’s leading tax reform success stories, but a new study from Mountain States Policy Center argues the Treasure State should not stop now. According to the study, adopting a competitive flat income tax would build on Montana’s recent reforms, simplify the tax code, strengthen economic growth, and help the state remain competitive with its neighbors.
The full study can be found here.
Over the past several years, Governor Greg Gianforte and Republican lawmakers have significantly reduced Montana’s income taxes. They cut the number of income tax brackets from seven to two and lowered the state’s top income tax rate from 6.9 percent to 5.4 percent. Those reforms helped Montana rank among the Top 10 states in the Tax Foundation’s 2026 State Tax Competitiveness Index.
Even so, Montana still has one of the highest income tax rates in the region. Wyoming and South Dakota have no personal income tax; North Dakota’s top rate is just 2.5 percent, and Idaho has a flat 5.3 percent income tax. As neighboring states continue lowering taxes to attract workers, businesses, and investment, Montana will need to keep reforming its tax code to stay competitive.
Montana is far from alone in pursuing a flat income tax. The study notes that 17 states either have or are moving toward a flat tax, with 10 adopting the reform within the past decade. The list spans a wide range of states, including Colorado, Ohio, Michigan, Iowa, and even Illinois, reflecting a growing recognition that flat income taxes are simpler, more efficient, and easier for taxpayers to understand and comply with.
According to the study, moving to a flat income tax would make Montana’s tax code simpler, more transparent, and more competitive. A single-rate system reduces compliance costs, improves revenue forecasting, and limits policymakers’ ability to target tax increases at specific groups of taxpayers. The study also recommends pairing a flat tax with revenue triggers, allowing future tax relief to occur automatically when economic growth generates sufficient revenue. Several states already use similar trigger mechanisms to responsibly lower taxes over time.
The study also recommends reducing Montana’s 6.75 percent corporate income tax, which remains one of the highest in the region. Lowering that rate would further strengthen the state’s ability to compete for businesses, investment, and jobs while building on the pro-growth reforms already enacted in recent years.
Montana has already demonstrated that tax reform works. Republicans simplified the tax code, lowered tax rates, and improved the state’s competitiveness. As more states embrace flatter, lower-rate tax systems, adopting a flat income tax would allow Montana to build on that momentum and remain a leader in pro-growth tax policy rather than risk falling behind.