Gov. Greg Gianforte signed a tax cut, rebate, and spending package totaling more than $1 billion Republican tax rebate on the steps of the state Capitol (Photo: KTVQ)
Gov. Greg Gianforte signed a tax cut, rebate, and spending package totaling more than $1 billion Republican tax rebate on the steps of the state Capitol Monday, flanked by dozens of Republican lawmakers.
The eight-bill package, which includes short-term property and income tax rebates and ongoing income tax cuts, devotes a significant portion of the state’s estimated $2.5 billion budget surplus to what the governor calls “the largest tax cut in Montana history.”
The bills also reduce the state’s business equipment tax, pay off $125 million in state debt, reform the state’s corporate income tax, simplify capital gains taxes, and put $100 million into a highway construction fund if the signed Republican tax rebate goes into law.
The package will provide $764 million in tax rebates and permanently reduce state tax collections by approximately $150 million per year, saving taxpayers roughly $300 million over the next two-year budget period.
Individual taxpayers can receive up to $1,250 in income tax rebates for taxes paid in 2021, and homeowners can receive up to $1,000 in total property tax rebates for taxes paid in 2022 and 2023.
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The governor’s office said Monday that the income Republican tax rebate would be automatically credited to taxpayers and that the state Department of Revenue would provide information on how homeowners should apply for the property tax rebates.
The permanent income tax cut reduces the state’s top-bracket marginal tax rate from 6.5% to 5.9%. Another provision in the income tax bill expands the state’s version of the federal Earned Income Tax Credit, which reduces taxes owed by low- and moderate-income working families. According to the governor’s budget office, the income tax cut is expected to reduce state revenue by about $150 million annually, while the earned income tax provision is expected to cost the state about $11 million annually.
Gianforte has argued that Montana’s income tax rates must be reduced to remain economically competitive with neighboring states.
Montana is one of only five states in the United States that does not have a statewide sales tax. The Tax Foundation, a national think tank, ranked the state’s overall tax climate as the fifth best in the country this year.
Democrats and progressive groups have argued that Republican tax rebate benefits the state’s wealthiest residents, who have more taxable income in the top income brackets.
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