Montana flat tax would boost incomes by $642 per citizen, create 2,400+ jobs
Moving Montana to a single 4.7 percent individual income tax rate could increase the state's economy by approximately $525 million annually, raise wages by $286 million, result in $642 in extra income for all Montanans, and support approximately 2,445 additional full time jobs. That is according to a new economic analysis released by Mountain States Policy Center.
The analysis, prepared for MSPC by economist Jared Walczak of Walczak Policy Consulting, examines the economic and fiscal effects of replacing Montana's current income tax structure with a single 4.7 percent rate. Compared with a 2026 tax-year baseline, the analysis estimates a static revenue reduction of $210 million and a dynamic cost of $192 million after accounting for additional economic activity.
But the economic benefits would far outweigh any revenue reduction.
The study was released as Mountain States Policy Center launched Flat. Fair. Montana., a statewide public education initiative designed to make the case for a simpler, flatter and more competitive Montana tax code.
“Montana has made tremendous progress on taxes, but the competition isn't standing still,” said Chris Cargill, President of Mountain States Policy Center.
“Workers, businesses and investment can move, and Montana is competing every day with states that have lower income tax rates—or no income tax at all. A 4.7 percent flat tax would let Montanans keep more of what they earn while making our state an even better place to work, invest and build a business.”
The economic analysis projects that moving to a 4.7 percent single-rate income tax, compared with the 2026 baseline, would result in:
The dynamic analysis estimates that stronger economic activity would offset a portion of the initial revenue reduction. In fact, while policymakers in Montana have lowered income tax rates, revenues to the state have only increased - even when adjusted for inflation. Since 2000, income tax revenue in Montana has increased 111%.
“This analysis demonstrates why tax policy is about more than simply calculating how much revenue government collects,” Cargill said. “Lower marginal rates change incentives. People have greater reason to work, invest and take risks. Businesses have greater opportunity to expand and hire. Those individual decisions add up, and the result can be a larger economy, higher wages and more opportunity.”
The underlying study explains that lower marginal rates can encourage additional economic activity as businesses invest, employment expands, wages rise and personal income grows. The analysis estimates annual wages would increase by approximately $286 million and projects approximately 2,445 additional full-time equivalent jobs throughout Montana.
“Montana has been moving in the right direction,” Cargill said. “The question now is whether we stop or continue building on that progress. We believe the next logical step is straightforward: one state, one rate—4.7 percent.”
The release of the economic study marks the beginning of a broader statewide education effort by Mountain States Policy Center. Flat. Fair. Montana. will include research, public events, digital education and a series of town halls giving Montanans an opportunity to learn about the proposal and ask questions about the potential economic and fiscal effects of moving to a flat tax.
“Montana doesn't make tax policy in a vacuum,” Cargill said. “We are competing for the next entrepreneur, the next employer, the next investment and the next generation of families deciding where they want to build their lives. Montana has enormous advantages. Our tax code should be one of them.”
The complete economic study and additional information about the Flat. Fair. Montana. initiative are available at FlatFairMontana.com.
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About Mountain States Policy Center
Mountain States Policy Center is an independent, nonpartisan research and educational organization dedicated to advancing free-market solutions, individual liberty and responsible government throughout the Mountain West. MSPC conducts research and provides policy analysis in Idaho, Montana, Washington and Wyoming.
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Mountain States Policy Center
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