Montana Governor Greg Gianforte has signed a bill (HB 337) on 28 April 2025 that cuts the top income tax rate and expands relief for working families.
Personal income tax (PIT)
Starting in 2026, Montana’s top income tax rate will drop from 5.9% to 5.65%, with a further cut to 5.4% in 2027.
Personal Income tax brackets
By 2027, married couples filing jointly will pay a 4.7% tax rate on income up to USD 95,000 (up from USD 41,000), while single filers will see the same rate applied to income up to USD 47,500 (up from USD 20,500).
The new income tax brackets will apply to income earned from 1 January 2026.
Capital gains tax
The bill updates the treatment of net long-term capital gains. Married couples filing jointly will pay 3% on gains up to USD 130,000 and 4.1% above that. If their non-qualified taxable income reaches USD 130,000 or more, all gains are taxed at the higher rate. The lower rate threshold is USD 97,500 for heads of households and USD 65,000 for single filers.
This takes effect on 1 October 2025.
Earned income tax credit (EITC)
The bill doubles Montana’s earned income tax credit (EITC), increasing it from 10% to 20% of the federal EITC, effective 1 October 2025.
