MISSOULA, Mont. — Montana legislators discussed a new bill aimed at reducing income taxes on Tuesday.
A key point of Senate Bill 121 would reduce the current state income tax rate from 6.5% to 5.9%, potentially leading to relief of $250 million over the course of the next two years.
“This is a very measured approach and does a good job helping the citizens of Montana. It reaches out and lowers taxes for almost all Montanans, and we feel that that is necessary at this time, especially in high inflationary times," said Ryan Osmundson, Gov. Greg Gianforte's budget director.
However, not everyone feels that big of a cut will be beneficial to the Treasure State.
“The level of tax cut in this bill is overly ambitious for what our experience has been in the state of Montana, with boom and bust cycles and seen inadequate revenue to maintain public services over time when we make adjustments downward to taxes," said Eric Burke, with the Montana Federation of Public Employees.
NBC Montana is following up to see if lawmakers took action on Senate Bill 121 following Tuesday's hearing.
The governor's office sent out the following information:
Montana taxpayers, industry leaders, business owners, and pro-business advocates today testified in support of Governor Greg Gianforte’s proposal to provide permanent income tax relief to Montanans.
A key proposal of the governor’s Budget for Montana Families, Senate Bill 121, sponsored by Sen. Becky Beard, R-Elliston, permanently reduces the income tax rate most Montanans pay from 6.5% to 5.9%. It also substantially increases the state’s earned income tax credit (EITC) match from 3% to 10%.
When the governor took office in 2021, the income tax rate most Montanans pay was 6.9%. Cutting the rate to 5.9% will amount to more than $250 million in income tax relief over the course of the next biennium.
Reducing the tax rate most Montanans pay will also make Montana more competitive with its neighbors. According to the Tax Foundation, Montana has the 14th highest top marginal income tax rate among all states, as well as the highest rate in the Rocky Mountain West.
Montana taxpayers at every income level will have tax relief by lowering the state’s top marginal income tax rate to 5.9% and expanding the EITC from 3% to 10%.
Before the Senate Taxation Committee this morning, many Montanans testified in support the bill.
Gary Wiens, CEO of the Montana Electric Cooperatives’ Association: “This tax package will help protect and improve the economic vitality of our local communities, letting individual and business taxpayers retain more of their hard-earned dollars so we can see a more prosperous Montana across the state.”
Brian Obert, Board President of the Montana Economic Developers Association: “The Montana Economic Developers Association (MEDA) is pleased to see that Governor Gianforte’s administration continues policies that strengthen the economic vitality of the State of Montana in the current bills being introduced. ‘The change process needs to be viewed as a long term, and incremental process,’ said Dr. Deming, father of the modern industrial revolution, espousing best practice in economic transformation that MEDA supports in building a strong Montana economy. These bills strike a tone of measured improvements that bolster the economy, but at the same time don’t sacrifice the essential services and infrastructure that make Montana a great state to call home.”
Sarah Converse, Executive Director of the North Central Montana Economic Development District: “Governor Gianforte’s tax package benefits all of Montana. With more dollars in their pockets, our small businesses, ag producers, and hardworking families will be able to invest back in our rural areas.”
Rebecca Meyers, on behalf of the Billings Chamber of Commerce: “Our members identified tax reform as a priority this legislative session. We are eager to support and thankful to the Governor for putting forth this proposal that will have significant benefits to our businesses, large and small. We believe competition is a good thing; we need to compete with our neighbors and other states, and reducing this will finally take us off the top of the income tax rate, putting us with neighboring states across the country. We think that’s a pretty good deal for business growth.”
Duane Williams, CEO of the Montana Trucking Association: “The trucking industry has over 21,000 jobs here in Montana which will benefit greatly from this.”
Jason Todhunter, Headwaters Regional Representative of the Montana Logging Association: “Our approximately 500 members run small businesses and are of working Montana. This is a good stroke of business for Montana employers and employees.”
Rebecca Meyers, on behalf of the Montana Economic Developers Association: “Given [our members] are in every county working hard with our department and the executive branch, remaining competitive and allowing our businesses, particularly small businesses, to see some of this relief is going to benefit our state greatly.”