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% to 6.5%.
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 didn’t immediately respond to a request for comment, on whether it may support the change approved by the committee.
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% to 6.5%.
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.