Montana Governor Greg Gianforte Proposes Flat Income Tax and Education Investments in New Budget

Governor Greg Gianforte aims to move Montana to a 4.7% flat income tax rate as part of a biennial budget proposal for the 2027 Legislature.

The proposal, which marks the beginning of the Governor’s final two-year term in the executive office, focuses on tax reductions, education funding, and increasing the state’s fiscal reserves.

“The budget I’m presenting this morning is about one thing: Realizing the ‘Montana Comeback,’ and knowing that at the end of my term, we will have left Montana in better shape than when we found it,” Gianforte said during a press conference at the state Capitol.

The shift to a flat tax departs from the state's current graduated system. Under current tax law, the transition to different rates for the 2027 tax year applies to single filers after their first $65,000 and joint filers after their first $130,000.

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While the Governor argues the move simplifies the system, Democrats have signaled they will fight the measure in the upcoming legislative session.

“The governor’s proposed flat tax does absolutely nothing for 80% of Montanans. For your average working Montanan, they will get literally not a dime,” said House Minority Leader-elect SJ Howell on Wednesday.

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Howell further argued that the policy favors wealthy residents over the general population.

“Instead, what the flat tax does is it says, ‘Let’s take $100 million a year and give it to the four or five thousand richest households in the state. That is not what Montana voters want.’” House Minority Leader-elect SJ

“A flat tax is a fair tax. If you make more, you pay more. If you make less, you pay less. It’s that simple,” Gianforte said.

The budget includes several one-time investments to increase state services and physical infrastructure. A major component is a $300 million injection into the budget stabilization fund, which would bring the state’s total reserves to a record $900 million.

Governor Gianforte Unveils Budget for 2027 Legislative Session: Realizing the Montana Comeback — Governor Greg Gianforte

The Governor emphasized that these reserves act as a safeguard against future economic volatility. By building this cushion, he argues, the state can protect essential services even if revenues drop during a downturn.

Education remains a centerpiece of the spending plan, though the funds are divided between infrastructure and specific policy incentives. The proposal includes $13 million for the school facilities trust and $1 million to encourage schools to implement cellphone-free policies. The administration has expressed interest in using these incentives to address student distractions and mental health concerns linked to social media.

Education infrastructure investment conceptual visual investing systems

The budget also outlines the following financial allocations:

Category	Proposed Funding Amount
State Highway Trust	$125 million
County Roads and Bridges	$100 million
Big Sky Scholarship Cap	$24 million
Behavioral Health Systems Fund	$25 million
State Employee Bonuses	$14 million
Emergency Services & Victims Shelters	$40 million

For small businesses, the Governor is proposing to raise the business equipment tax exemption from $1 million to $3 million. He said that previous adjustments to this exemption, which sat at $100,000 when he took office, had already assisted thousands of small businesses by removing the need to tax minor inventory items like utensils.

The roadwork investments are designed to use federal matching programs. Gianforte said that these funds would allow the state to maximize its impact while avoiding a necessary increase in the state gas tax.

The full details of the budget are scheduled for release on Monday.

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