A decade of income tax rate reductions in Montana coincided with a more than doubling of both individual and corporate income tax collections, according to a new analysis by the Mountain States Policy Center. The findings challenge the conventional argument that cutting tax rates necessarily reduces government revenue.
What the Numbers Show
The Mountain States Policy Center examined Montana tax collection data across a ten-year window and found that individual income tax revenues climbed from $1.06 billion in fiscal year 2014 to $2.24 billion in fiscal year 2024 — a 111 percent increase. Corporate income tax collections nearly kept pace, rising from $147.6 million to $312.3 million over the same period, a gain of 112 percent.
That revenue growth outpaced population growth in Montana during the same timeframe, meaning the state collected significantly more per capita even as lawmakers reduced the rates taxpayers owed.
A Decade of Rate Reductions
The tax changes were incremental but substantial. In 2021, the Republican-controlled legislature and Governor Greg Gianforte consolidated Montana’s seven income tax brackets down to two, simplifying the rate structure considerably. Lawmakers followed that move in 2023 by dropping the top income tax rate to 5.9 percent, and again in 2025 by reducing it further to 5.4 percent.
The pattern represents one of the more aggressive state-level tax reform efforts in the Mountain West region over the past several years, carried out in successive legislative sessions under unified Republican governance.
Cargill: Montana Tells a Different Story
Mountain States Policy Center President Chris Cargill framed the data as a rebuttal to critics who contend that income tax cuts deprive state governments of needed revenue. “Montana’s experience tells a different story,” Cargill said.
The think tank’s analysis attributes the revenue surge at least in part to economic expansion and in-migration that the rate reductions may have encouraged, though the broader economic environment and demographic changes in Montana during the period also contributed to growth. The center did not specify a precise causal breakdown between tax policy and external economic factors.
Policy Context and the Road Ahead
The findings land in the middle of an ongoing national debate over supply-side tax policy at the state level. Proponents of lower income taxes argue that competitive rates attract businesses and higher-earning residents, generating a larger overall tax base even at reduced rates. Opponents argue that correlation between rate cuts and revenue growth can reflect other economic drivers and that the same growth might have occurred under higher rates.
Montana’s political environment has strongly favored the rate-reduction approach. Governor Gianforte, who took office in January 2021, made tax reduction a central plank of his administration. Republican supermajorities in the legislature during the 2021, 2023, and 2025 sessions gave that agenda a clear path to enactment.
The most recent reduction — lowering the top rate to 5.4 percent — was enacted during the 2025 regular session, which adjourned earlier this year. With the next regular legislative session not scheduled until January 2027, the current rate structure will remain in place through at least the end of next year’s budget cycle. Any further adjustments would require either a special session or action in 2027.
The Mountain States Policy Center’s analysis is likely to feature prominently in debates about the state’s fiscal direction as candidates in the June and November 2026 election cycles stake out positions on taxation and government spending.
