Gianforte’s proposed budget includes a proposed flat income tax and one-time investments in mental healthcare, roads, and school funding

Montana Gov. Greg Gianforte said Thursday the biennial budget proposal he will submit to the 2027 Legislature will include additional income tax cuts and  investments in education and the state’s fiscal stability.

Holding a press conference at the state Capitol at the start of his final two-year budget in the executive office, Gianforte emphasized the work he’d done for Montana during his six years in office. 

He was elected twice to the governorship on a platform of getting government “off the backs of hardworking Montanans” by cutting regulatory “red tape” and taxes, stewarding tax dollars, promoting individual freedoms, and backing law enforcement. 

“The budget I’m presenting this morning is about one thing: Realizing the ‘Montana Comeback,’ and knowing that at the end of my term, we will have left Montana in better shape than when we found it,” Gianforte said. 

Outlining a budget he says underpaces inflationary growth, Gianforte began with a principle he’s held every day in office: “this money belongs to the people of Montana, not the government, and you know how to spend your hard-earned money better than the government does.”

A primary pillar of Gianforte’s budget proposal is to move Montana to a flat income tax so that every Montana would pay the same 4.7% rate, and increase the earned-income tax credit from 20% to 30% of the federal credit. 

Gianforte has sought to decrease income tax rates every biennium, and has succeeded in simplifying the state’ income tax brackets from seven to two, and cut the top tax rate from 6.9% to 5.4%. 

“Now we need to finish the job. Thanks to our strong budget reserves, Montana is able to move to a flat income tax rate,” Gianforte said. “A flat tax is a fair tax. If you make more, you pay more. If you make less, you pay less. It’s that simple.”

While Republican leadership in the state Senate have backed the governor’s proposed flat tax, it will face united opposition from Democrats, who are in the minority in both chambers. 

“The governor’s proposed flat tax does absolutely nothing for 80% of Montanans. For your average working Montanan, they will get literally not a dime,” said House Minority Leader-elect SJ Howell on Wednesday. “Instead, what the flat tax does is it says, ‘Let’s take $100 million a year and give it to the four or five thousand richest households in the state. That is not what Montana voters want.”

Under current tax law, in 2027 the move from the 4.7% and 5.4% tax rate kicks in for single filers after their first $65,000, and for joint filers after their first $130,000. 

Gianforte is also proposing to raise the business equipment tax exemption from $1 million to $3 million. When he took office, the exemption was set at $100,000. 

“Restaurants had to count every fork, knife and spoon to see if their inventory added up to be taxed,” he said, adding that the changes had saved “over 5,000 small businesses from this nuisance.”

Another major part of the budget to realize what the governor has repeatedly termed “Montana’s Comeback” is the addition of a one-time investment of $300 million to the budget stabilization fund, bringing it to a record $900 million. 

“That’s money set aside to protect taxpayers, essential services, and underscores our ability to further reduce income taxes,” he told reporters. 

Gianforte said that putting aside money for a rainy day is important  for future economic downturns when state revenues might see drastic dropoffs. 

“We don’t want to be in a position where we can’t fulfill essential services,” he said. “Fortunately, today we have a very strong economy and revenues. That’s why we can make the investments that we’re making.”

The governor outlined a series of additional one-time investments into education programs including $13 million in the school facilities trust and $1 million in incentives for schools to adopt cellphone-free policies.

“The ‘Montana Comeback’ can only last if we continue to support students, parents, and teachers. Every Montana student deserves a great education, and this budget keeps that commitment by fully funding public education, keeping that promise for the next generation,” Gianforte said, adding that his administration had heard “loud and clear” from educators and administrators that schools need maintenance investments.

He has also made it clear in previous years that he would like to see a way to keep cell phones out of classrooms to eliminate distractions to students and help with mental health problems buoyed by social media. 

The governor’s budget also proposes increasing the Big Sky Scholarship program to $24 million. The program offers tax credits for public and private education programs, allowing more lower- and middle-income families to consider school-choice options for their kids. 

Additional one-time funding proposals the governor highlighted include $125 million in the state highways trust; $100 million for county roads and bridges; and $40 million in emergency services and victims shelters; and $45 million for state employees. That includes $14 million in one-time bonuses for state employees. 

The investments in state and county roads, the governor said, are all tied to federal matching programs which would allow the state investment to leverage up to seven times as much investment, and the investment in state highways trust would stave off a need to raise the state’s gas tax. 

“We’ve come a long way, but there’s more to do,” Gianforte said. “We’ll keep cutting red tape that holds back Montana businesses and workers. We’ll act on the recommendations of our energy and licensing task forces so that Montanans have affordable, reliable energy, and so that workers can get to working without needless barriers. We’ll let hardworking Montanans keep more of what they earn, and will keep Montana the best place to live, work, and raise a family.”

The governor’s full budget will be released on Monday. The following are highlights from Gianforte’s 2029 biennium budget proposal:

• Reduce the state’s top income tax rate from 5.49% to 4.9% — a flat rate
• Raise the business equipment tax exemption from $1 million to $3 million
• Invest $25 million in the Behavioral Health Systems for the Future Generations Fund
• Invest $5 million to expand shelter capacity for victims of human trafficking and violent crime
• invest $10 million in local 911 emergency systems
• Allocate $30 million to the state health plan
• Allocate $14 million for one-time bonuses for state employees
• Raise the cap on the Big Sky Scholarship to $24 million
• Allocate $1 million in cell-phone free policy incentives
• Invest $13 million in school facilities trust
• $100 million in one-time funding for county roads and bridges
• $125 million in one-time funding for state highway trust