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Senate considers income tax bracket shift aimed at relief for middle-income taxpayers
Summary
Senate Bill 203, introduced by Senator Yakovich, would raise the threshold for Montana's top income tax bracket to lower rates for many middle-income filers; sponsor described a targeted $200 million revenue reduction and urged referral to finance and claims for fiscal review.
Senate Bill 203, introduced by Senator Tom Yakovich, proposes raising the income threshold that triggers Montana’s top marginal tax rate so that more middle-income taxpayers would pay a lower rate. The bill was taken up on second reading March 31 and was reported to the Appropriations/Finance process for further fiscal review.
Yakovich described the bill as aimed at the middle class: it increases the threshold for the higher personal income tax rate (reducing the top marginal rate for many taxpayers) so that a larger share of taxable income would be taxed at 4.7 percent rather than 5.9 percent. He said the measure is intended to be targeted mainly at taxpayers in roughly the 60th–90th percentiles of income and discussed a revenue-reduction target he described to the Senate as about $200 million, noting the bill would be further adjusted in the finance and claims process.
Senators asked questions on distributional effects. Senator Greg Hertz praised the bill as broadly affecting many taxpayers and highlighted the likely rate reduction for many filers; Senator Michael Dunwell raised concerns about impacts on the highest earners and whether opponents would say the bill helps the top decile, to which the sponsor responded the bill is tailored to middle-income thresholds and does not lower rates for the uppermost brackets. Senator Lentz spoke in support emphasizing relief for certain joint filers and the bill’s targeting of a middle-income "sweet spot." Senator Yakovich asked that the bill be passed to the finance and claims committee for additional fine tuning.
On the floor the majority leader moved referral of SB 203 to finance and claims; the motion was agreed to without objection. The Senate record shows the bill was advanced for further fiscal review; no roll-call tally for the second-reading recommendation was recorded in the excerpted floor reading. Sponsor remarks and the floor record indicate the bill will be further evaluated by fiscal committees before additional floor action.
The bill text as read on the floor states it would adjust bracket thresholds for all filing statuses, provide an immediate effective date, and include a retroactive applicability date; the sponsor emphasized the bill targets middle-income filers and intends to avoid affecting lower percentiles.
