by Michael J. Marino
Montana Governor Greg Gianforte signed four bills into law on Monday, March 13 that will reduce state income tax rates and provide various other rebates for Montana taxpayers.
The first is Senate Bill (SB) 121, which reduces the “top marginal individual income tax rate” to 6.75%. The highest bracket of taxable income is defined as “any taxable income in excess of $17,400 or any part of that income.” SB 121 also increases the credit allowed under the Earned Income Tax Credit (EITC) from 3% to 10% per year.
House Bill (HB) 221, sponsored by Rep. Tom Welch (R-Dillon), provides a tax reduction for money earned by way of net long-term capital gains. The first $20,500 earned from capital gains will now be taxed at 3%, while any amount after that will have a 4.1% tax applied to it.
HB 222, also sponsored by Rep. Welch, creates a property tax rebate for “a principal residence that was occupied by the taxpayer” of up to $500 for tax years 2022 and 2023.
HB 192 distributes the state’s surplus revenue in the form of tax rebates on certain individual income tax filers. The bill directs the state treasurer to transfer $480 million from the general fund to the “Montana surplus rebate account,” contemplated by the bill. Rep. Bill Mercer (R-Billings) sponsored HB 192.
While many are celebrating these new tax laws, such as those who qualify for the EITC, not everyone is happy about them.
The Montana Democratic Party released a media statement calling the four bills “a billion dollar spending spree in tax handouts to the wealthy,” and further said they are “rushed [and] irresponsible.”
In contrast, the Governor said, “After providing Montanans with over $1 billion in tax relief, we’re going to invest our surplus responsibly like any Montana family would, making needed repairs and paying off our debt.” He continued, “Today, we’re making Montana debt-free in ‘23, saving Montanans $40 million over the next two years.”
Gov. Gianforte also said the state intends to use $100 million from the surplus to repair roads and bridges.
