Montana Governor Backs a 4.7% Flat Income Tax

The proposal would replace Montana's two ordinary-income rates with one, going beyond the top-rate reduction already scheduled for 2027.

By: John Napoletano

Published: October 5, 2026

Governor Greg Gianforte is backing a proposed 4.7% flat individual income tax as Montana looks toward its 2027 legislative session. He joined Mountain States Policy Center (MSPC) on September 8 to launch the Flat. Fair. Montana. campaign, which advocates replacing the state's two ordinary-income tax rates with one.

The 4.7% flat rate is a proposal, not a new rate taxpayers can use on their returns. Montana already has a separate law lowering its top rate to 5.40% in 2027. The governor's push would go further by removing the higher rate altogether.

How the Proposal Differs From Current Law

The Montana Department of Revenue (DOR) lists two ordinary-income rates for both 2026 and 2027 under House Bill 337. The table below separates those enacted schedules from the campaign's proposed single rate.

Under the enacted 2027 schedule, the 4.70% rate covers the first $65,000 of taxable ordinary income for single filers and married taxpayers filing separately. The limit is $130,000 for married couples filing jointly and qualifying surviving spouses, and $97,500 for heads of household. Only the portion above the applicable limit is taxed at 5.40%.

Montana taxes net long-term capital gains separately at 3.00% and 4.10% under current law. The campaign announcement does not explain how a future flat-tax bill would treat those gains, so the proposed 4.70% rate should not be assumed to replace every rate in the tax code.

Who Could See Additional Income Tax Savings?

If lawmakers replace only the upper ordinary-income rate with 4.70%, the additional savings would apply to income that would otherwise fall in the higher bracket. Income already taxed at 4.70% would receive no further rate reduction from that change alone.

Compared with the enacted 5.40% top rate for 2027, a 4.70% rate is 0.70 percentage points lower. For each $10,000 of taxable ordinary income otherwise subject to 5.40%, that difference would reduce tax by $70 before credits, assuming the rest of the calculation stays the same. This illustrates the rate difference, not a guaranteed saving under a final bill.

Why the Governor Supports a Flat Tax

In his September announcement, Gianforte argued that a flat tax would help Montana compete for jobs and investment while letting residents keep more of their earnings. MSPC presents the campaign as a way to make the income tax system simpler and more transparent.

MSPC President and CEO Chris Cargill cited an economic analysis projecting increases in state output, wages, jobs, and after-tax income. Those are projections presented by supporters, not measured results of an enacted Montana flat tax. A taxpayer's own savings would depend on the final law and the income, deductions, and credits on the return.

Use Enacted Rates While the Proposal Develops

Lawmakers could approve, revise, or reject the flat-tax proposal during Montana's 2027 legislative session, expected to run from January through May. Any enacted legislation would determine the starting tax year and accompanying changes. We will follow the proposal as lawmakers consider it. Until the law changes, taxpayers planning withholding or estimated payments should continue using the Montana Department of Revenue's guidance for the applicable year.

Our Montana income tax rates and brackets page explains the current calculation. For available Form 2 returns and instructions, see our Montana income tax forms page.

Income Tax News Legislation 2026