Legislative Fiscal Division analysts told the House Taxation Committee that individual and corporate income taxes account for the largest share of Montana's ongoing general revenues and are difficult to forecast, increasing the state's exposure to year-to-year swings.

Sam Schaeffer of the Legislative Fiscal Division presented a chart showing general ongoing revenues and said individual income tax represented roughly 57% of ongoing general revenues in fiscal 2024 and that combined individual and corporate income taxes represented about 65% of the state's general revenues. "Individual income taxes are the biggest share of this pie," Schaeffer said, and he highlighted that those two sources have substantially larger year-to-year growth volatility than other major sources such as vehicle taxes or video gaming taxes.

Nut graf: because individual and corporate income tax receipts are both large and volatile, the state budget faces a higher propensity for surpluses or shortfalls year to year, making frequent revenue monitoring important.

Body: Schaeffer explained that the Legislative Fiscal Division produces the HJ2 revenue estimates used for fiscal notes and that the committee will receive periodic updates. He described the two biggest revenue sources as subject to taxpayer behavior and volatile items such as capital gains, rental and dividend income. "There's a lot of taxpayer behavior behind the scenes when we look at corporate and individual income taxes," he said.

Committee members asked for more frequent updates. Schaeffer said LFD typically presents revenue updates monthly during session and can provide revenue updates in the second week of each month after monthly books close.

Ending: The committee was told the HJ2 dashboard and related volume 2 materials are available on the LFD website and that staff will continue to provide revenue updates and forecasts throughout the session.