Montana governor proposes 4.7% flat income tax rate

Montana Gov. Greg Gianforte announced Tuesday his administration will propose a 4.7% income tax rate, which drew immediate criticisms from Democrats.

The state currently has a two-tiered, graduated income tax system that tops out at 5.4%.

Many Montanans already have a 4.7% tax rate, which is the case for households filing jointly for taxable income of as much as $95,000. Montana has gone from seven tax brackets to two since Gianforte took office in 2021.

Earlier this year, a Montana Legislative Fiscal Division report said that a flat 4.7% income tax would reduce state tax collection by up to $130 million per year by 2029.

The governor announced the policy proposal at an event co-hosted with Mountain States Policy Center, a nonprofit research organization that’s part of the larger State Policy Network, a coalition of conservative think tanks. 

Gianforte said the move was driven by the state’s strong economy and a desire to bring more people and jobs to the state. Other states around Montana, including South Dakota and Wyoming, don’t have income taxes, with the governor saying that puts the state at a disadvantage. Idaho also has a flat-tax rate.

“It would provide certainty to Montanans as well as business owners looking to invest in our state and create jobs,” Gianforte said on Tuesday. “But what’s the real advantage of a flat tax? Once you get there, it’s really hard for future legislatures to raise it because they’ve got to raise it on everybody.”

Americans for Prosperity, a conservative political advocacy group partly backed by the Koch brothers’ fortune, has previously praised the state’s efforts to move to a flat tax.

In a message to those who oppose the flat-tax idea, Gianforte said that the hit to the budget will be mitigated by a disciplined budgeting practices.

“I know some opponents of this proposal, what they’re going to say, they say a flat, fair tax will harm the state budget,” Gianforte said. “To them I say, ‘Look at what we’ve done with our strong conservative budgeting.’”

The governor pointed to Montana’s fiscal health, which he said had moved from No. 22 in the nation to No. 8 according to Truth in Accounting, a tax-focused nonprofit connected to the Searle Freedom Trust, a former conservative grant-making foundation. He added “there’s just no way to tax your way to prosperity” and added prosperity happens with “lower taxes and common sense budgeting.”

State Democrats and the Montana Budget and Policy Center, which is a nonprofit focused on budget issues, opposed the idea and spoke out Tuesday. 

“This proposal is a $120 million tax break for the wealthiest income earners. If there’s one thing we have learned, it’s that trickle-down economics is a myth,” Rep. Mark Thane, a Missoula Democrat and the vice chair of the House Taxation Committee during the 2025 session, said in a new release. “The state is currently failing to honor the agreed upon 3% provider rate increase for Medicaid, jeopardizing our rural hospitals and healthcare providers. What have other states done when faced with revenue shortfalls? They instituted a statewide sales tax.”

Thane added that Democrats also would “never” support a statewide sales tax, which has been discussed among state Republicans heading into the 2027 legislative session.

Rose Bender, the director of research at the Montana Budget and Policy Center, said it was a giveaway to rich Montanans and would have little impact on most people. Analysis by the nonprofit says the top 20% wealthiest households will receive 95% of the income tax reductions. 

“When you look at the top 1% of those earning over $900,000 each year, they’re going to see over almost $9,000 in annual average tax cuts. So it’s a choice essentially to give $120 million more away each year in tax cuts for the wealthy,” she said.

Gianforte and Mountain States Policy Center CEO Chris Cargill promised more jobs. Cargill pointed to Janicki Industries moving to the state as one example.

“I think the fact that Montana has low electricity prices, lots of land value, and also makes it easy for businesses to open and operate here is very, very attractive for a lot of businesses who are out of state,” Cargill said, adding that in Jancki’s case, it was “because it thought the business environment in Washington was terrible” and that some tax changes in the Evergreen State are scaring away business.

Montana’s economy is also heavily tied to the real estate market and by gross domestic product, real estate has been Montana’s largest industry for about two decades and added $12.2 billion to the state GDP in 2025.

Bender said it left her wondering what the “end goal” of the tax cuts were.

“If this is a bid to be more competitive as a place for folks to move, I think we should look at what that is doing to housing costs in Montana, and what it means for affordability for folks already living here,” Bender said. “And what do Montanans actually want?”

Source: Washington State Standard

This article was originally published by Washington State Standard.