In April 2025, Montana took a major step toward a more competitive economic future. With the signing of House Bill 337, Governor Greg Gianforte enacted the largest income tax cut in state history, advancing a broader strategy to attract investment, strengthen job creation, and expand opportunity for working families.
The reform reflects a simple but proven economic principle: when states reduce the tax burden on work, investment, and entrepreneurship, they create stronger conditions for long-term growth.
At its foundation, tax policy shapes behavior. Lower income taxes increase the return on labor, savings, and risk-taking, encouraging workforce participation, capital investment, and small business expansion. In an increasingly mobile economy, where workers and employers can relocate more easily than ever, competitive tax policy matters.
Montana’s reform moves decisively in that direction. The law reduced the top income tax rate from 5.9% to 5.4% over two years, expanded eligibility for the lower 4.7% bracket, and doubled the Earned Income Tax Credit for lower-income workers. The result is broader relief paired with stronger incentives to work, invest, and grow businesses in Montana.
The reform sends a clear message: Montana intends to compete. Neighboring states such as Wyoming and South Dakota impose no income tax at all, while Idaho and Utah continue pursuing lower, flatter tax structures. If Montana hopes to remain attractive to employers, entrepreneurs, and skilled workers, it cannot afford to stand still.
This reform must be viewed as a beginning, not an endpoint. By reducing brackets and lowering rates, the state is moving toward a simpler, flatter tax structure. As the governor noted:
“The reality is, even after our historic tax cuts, we still have the highest income tax rate in the region. Across the country, states are cutting their income tax rates. To stay competitive, we must do the same.”
A flat tax is the logical next step for Montana: one low rate applied broadly and fairly across the tax base. A flatter system would reduce complexity, improve transparency, and create greater certainty for workers and businesses alike. It would also strengthen Montana’s reputation as a pro-growth state at a time when economic competition between states is intensifying.
By continuing the transition toward a simple, competitive flat tax, Montana can build on this momentum to create a tax code that rewards work, encourages investment, and positions the state for stronger growth in the decades ahead.
Read the full editorial here: Montana should join the flat tax revolution
Subscribe to Pinpoint Policy Institute