Bill > HB337

This bill is a comprehensive income tax reform measure designed to lower income tax rates and provide tax relief for Montana residents. The legislation makes several key changes to the state's tax structure, including increasing income tax brackets across different filing categories (such as married joint filers, heads of household, and individuals) to allow more income to be taxed at lower rates. Specifically, the bill gradually reduces the highest marginal tax rate from 5.9% to 5.65% in 2026 and then to 5.4% in 2027, while significantly increasing the income thresholds at which higher tax rates apply. For example, for married joint filers, the higher tax rate threshold increases from $41,000 to $95,000 in 2026 and then to $130,000 in 2027. The bill also doubles the Earned Income Tax Credit (EITC) from 10% to 20% of the federal credit, which will provide additional tax relief for lower-income workers. Additionally, the legislation introduces a modified inflation factor for adjusting tax brackets and sets specific effective dates for different provisions, with some changes taking effect in 2026 and others in 2027. The bill aims to make Montana's income tax system more progressive and provide tax relief across various income levels.