HELENA — Republicans on a House committee Friday voted to increase the state income-tax cut in Gov. Greg Gianforte’s signature tax-cut bill, making it a cut in the state’s top marginal rate from 6.9 percent to 6.5 percent.
The original Senate Bill 159, as proposed by Gov. Gianforte, reduced the state’s top income-tax rate from 6.9 percent to 6.75 percent, on any taxable income over $18,700.
Rep. Rhonda Knudsen, R-Culbertson, who offered the amendment, said the original proposal would reduce state income taxes for the average household in her northeast Montana district by only about $40.
“I want to go back to my district and I don’t want to just say, `We’re going to give $40 to hold in your pocket,’” she said. “So I talked to the (state) revenue director, I talked to the governor, and I said, `Can we try to extend that a little bit?’”
The House Taxation Committee voted 12-6 to approve her amendment, along party lines, with Republicans in favor.
Democrats on the panel said the governor’s original proposed tax cut already will cost the state treasury $30 million, and questioned whether the budget can absorb further cuts, especially when the state is just now recovering from a pandemic.
Rep. Alice Buckley, D-Bozeman, said the governor’s office appeared by to approaching tax-cut plans cautiously, and said the change goes against that strategy.
Gianforte’s office said Friday he supports providing tax relief to Montanans -- "as long as it's fiscally prudent and responsible."
The House Taxation Committee delayed final action on the bill until it gets a revised analysis of the fiscal impact of cutting the top rate from 6.9 percent to 6.5 percent.
Knudsen said if the bill passes out of committee and is endorsed by the full House, she'd ask that the bill be sent to the House Appropriations Committee to see if it fits within the overal state budget.
Gianforte has said he wants to make Montana’s state income tax more “competitive” with nearby states, many of which have no state income tax or a lower top rate.
He also has proposed other changes that could lower state income tax rates further in the future, or exempt stock profits from some new businesses from capital-gains taxes.
SB159, which lowers the top rate, has been approved by the state Senate. It is sponsored by Sen. Greg Hertz, R-Polson.