Montana Legislature Eyes 4.7% Flat Individual Income Tax by 2027

Montana Senate Republican leaders have backed Gov. Greg Gianforte’s proposal to replace the state’s two-bracket system with a 4.7% flat income tax rate in 2027, moving the idea toward legislation ahead of the session that begins January 4, 2027.

Senate President Matt Regier requested a bill draft on July 10, 2026, titled “Lower Montana state income tax rate.” The request followed a public alignment by Senate leaders on July 10 and announcements issued between July 13 and July 15.

Regier, Senate President Pro Tempore Ken Bogner, Senate Majority Leader Tom McGillvray and Senate Taxation Committee Chair Greg Hertz are supporting the proposal. Gianforte has made a single 4.7% rate his target for all Montanans.

The plan would reduce collections. A Legislative Fiscal Division projection cited in the coverage estimates that a 4.7% flat tax would cut individual income tax collections by $130 million per year by fiscal year 2029.

Gianforte called a flat tax the “best policy around” and said he wants to “return money back to Montanans who work hard to earn it.” His administration has pursued tax reductions since he took office in 2021.

Senate leaders turn a gubernatorial priority into a bill request

Regier framed the proposal as a major Republican policy goal. In a July 13 statement, he said Gianforte had made clear that reaching a flat income tax rate was best for Montana.

“Gov. Gianforte has made it abundantly clear that getting Montana to a flat income tax rate is best for our great state. We’re committed to delivering that major conservative policy win that will keep more money in the pockets of Montana families.”

The administration described the 2027 effort as part of its economic agenda. Kaitlin Timken, Gianforte’s director of communications, said the governor was focused on securing a fair, flat rate and returning money to working Montanans.

The bill request gives the proposal a formal legislative vehicle. Lawmakers will decide whether to replace the existing structure with one rate or pursue another design.

Montana’s current two-rate system would give way to one rate

For tax year 2026, Montana applies 4.7% to taxable income up to $47,500 for single filers, $71,250 for head-of-household filers and $95,000 for joint filers. Income above those thresholds faces a 5.65% rate.

That structure followed House Bill 337. The measure replaced the state’s former higher top rate, while another reduction to 5.4% is scheduled for 2027 unless lawmakers change the policy path.

The proposed rate would leave taxpayers already in the lower bracket at 4.7%. Taxpayers currently subject to the upper rate would face a lower rate if the proposal becomes law. Compared with the scheduled 5.4% rate, supporters describe the reduction for higher earners as 0.7 percentage points.

Montana has reduced its top rate from 6.9% since 2021 and compressed its system from seven brackets to two. The proposed change would complete that progression with a single rate.

The revenue reduction becomes the central budget question

Individual income tax supplied approximately 66% of Montana’s general fund revenues as of FY 2025, making the projected reduction a direct budget issue. Legislative fiscal analysts have warned that current spending and revenue projections could leave the state facing deficits by 2029 if lawmakers continue cutting revenue without corresponding spending reductions.

Hertz defended the proposal by pointing to economic growth and collections that exceeded expectations. He said those conditions allowed lawmakers to reduce taxes further after earlier changes.

“During that time [since 2021], the state’s economy and wages have continued to grow and state revenue has continually outpaced projections, allowing us to further reduce taxes and now to move to a flat income tax.”

Recent revenue growth has drawn a more cautious response from Democrats. Sen. Dave Fern, a Democrat from Whitefish and a member of the Revenue Interim Committee, said July 17 that revenue increased 4.1% rather than declining by the expected 1.7%.

Fern attributed that performance to unusual conditions, including high in-migration and wealth connected to remote work. He warned that those factors could fade as growth returns to normal levels, leaving tax reductions to “neuter” future budget stability.

Supporters point to competitiveness and lower-income credits

Jesse Ramos, state director of Americans for Prosperity-Montana, said the proposal would establish one set of rules for taxpayers and support economic growth.

“A flat tax means every Montanan plays by the same rules, rewards opportunity, strengthens our economy, and makes Montana more competitive.”

Supporters have also compared Montana with neighboring states. Wyoming and South Dakota impose no individual income tax, while Idaho uses a flat 5.3% rate.

House Bill 337 separately doubled Montana’s Earned Income Tax Credit from 10% to 20% of the federal credit. Supporters say that increase provides relief for lower-income workers, many of whom already pay the 4.7% rate under the current system.

The plan follows an earlier tax-cut debate. During the 2025 session, lawmakers tabled more aggressive proposals, including Senate Bill 323, amid concerns about “pulling off too much money, too fast.”

The 2027 session will test the Senate’s commitment

The Senate leadership announcement signals a different starting point for the next session. Regier has already asked for drafting work, while Bogner, McGillvray and Hertz have publicly aligned with the governor.

Gianforte also argued that a flat tax would be harder for future legislatures to raise because any increase would apply to every taxpayer.

“The real advantage of a flat tax is once you get there, it’s very hard for future Legislatures to raise it, because they have to raise the tax on everybody.”

The Mountain States Policy Center added support on July 15, 2026, with a study titled “Why Now is the Time for Montana to Join the Flat Tax Revolution,” authored by Jason Mercier.

The proposal now heads toward the January 4, 2027 opening of the Montana Legislature, with a projected $130 million annual reduction by fiscal year 2029 and competing arguments about growth, competitiveness and budget capacity.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.