Montana ends its legislative session with major income tax relief

The 2025 Legislative Session is officially over in Montana. Lawmakers in the Treasure State focused on several priorities during their time in Helena, including record income tax relief, reducing business costs with unemployment insurance reform, and clarifying environmental laws in response to court rulings. There were a couple of missed opportunities as well, and although property tax relief bills were approved, more work needs to be done to avoid further cost shifting and to bring greater transparency to why property taxes are increasing.

Although not as large as originally proposed by Governor Gianforte, record income tax relief was adopted with the approval of HB 337. The various income tax changes are expected to save taxpayers more than $750 million over the next four years. Even with this record tax cut, there is more work to be done in Montana.

As noted by the Governor:

“The reality is, even after our historic tax cuts in 2021 and 2023, we still have the highest income tax rate in the region and one of the highest in the nation.”

Continuing the tax cut theme, lawmakers also adopted HB 210 to reduce the state’s unemployment insurance burden for businesses. These changes are expected to save employers approximately $250 million over the next decade.

Secretary of State Jacobsen said:

“We’ve had record business growth in the state of Montana under Republican leadership in the last four years. In 2024, we had over 64,000 new businesses in the state. This is just a continued move to have historic tax cuts for Montana businesses and getting government out of the way so Montana businesses can thrive.”

Property tax reform was a big focus of the 2025 Legislative Session, but structural changes may need to wait for the next time lawmakers meet in 2027. SB 542 essentially freezes property tax values for the next two years, while HB 231 did reduce property taxes, but did it by shifting the burden to other taxpayers. Not acted on was the proposal for Truth in Taxation to bring greater transparency to what drives the property tax burden – spending.

As noted by Senate Taxation Committee Chair Greg Hertz:

“Unfortunately, all we did was just rearrange who is paying property taxes in Montana.”

Along with reforming taxes, lawmakers spent time addressing the state Supreme Court’s controversial environmental rulings. Discussing these bills, Governor Gianforte said:

“Last year, the Montana Supreme Court issued a series of rulings that if left unchecked would have impacted Montana’s energy sector at time when Americans have seen electricity costs soar nearly 30 percent in the last four years. This package of legislation reduces red tape and provides certainty to small and large businesses across our state.”

According to the Governor’s press release, the five reform bills are:

• HB 285 - Reaffirms that the purpose of environmental reviews is procedural in nature and is to share information with policymakers and the public.
  

• HB 270 - Clarifies that courts may not vacate permits without properly considering a number of factors in law, including impacts to Montana’s economy and the public interest.
  

• HB 291 - Makes it clear that the State of Montana cannot adopt air quality standards that are stricter than the federal government’s, except in specific circumstances.
  

• HB 466 - Outlines that projects that are exempt from National Environmental Policy Act are also exempt from MEPA, reducing burdensome red tape and potentially duplicative processes.
  

• SB 221 - Clearly states what impacts are required to be included in MEPA assessments and directs DEQ to develop guidance for use by state agencies.

  
  

While Montana's 2025 Legislative Session saw mostly positive outcomes for supporters of the free market and limited government policies, there were a couple of curious decisions. One was the approval of HB 477 to ban Styrofoam products. Another was the failure to advance SB 94 to end taxpayer subsidies of government union activities.

When all was said and done during the 85 days of session, Montana lawmakers debated a record 1,759 bills, sending 803 of those to the Governor’s desk. Realizing these are part-time lawmakers who have sacrificed time away from their families and regular jobs, Mountain States Policy Center sends our thanks for their service and commitment to the people of the Treasure State.