HB337: 2026–2027 Montana Individual Income Tax Changes
2025 Montana Legislative Roundup – Major Updates to Montana’s Tax System
The 69th Montana Legislature made several changes to Montana’s tax laws. The 2025 Legislative Roundup is an ongoing series to explain these new laws.
Overview
House Bill 337 (HB337) changes income taxes for individuals by expanding the bracket for the lower rate and reducing the upper rate. These changes apply to tax years 2026 and 2027, as shown below:
Tax Year 2026 Income Tax Brackets
| Tax rate on taxable income* | Married filing Jointly and Surviving Spouse | Head of Household | Single and Married filing Separately |
|---|---|---|---|
| 4.7% on taxable income* | $1 to $95,000 | $1 to $71,250 | $1 to $47,500 |
| 5.65% on taxable income* | over $95,000 | over $71,250 | over $47,500 |
Tax Year 2027 Income Tax Brackets
| Tax rate on taxable income* | Married filing Jointly and Surviving Spouse | Head of Household | Single and Married filing Separately |
|---|---|---|---|
| 4.7% on taxable income* | $1 to $130,000 | $1 to $97,500 | $1 to $65,000 |
| 5.4% on taxable income* | over $130,000 | over $97,500 | over $65,000 |
*taxable income does not include long-term capital gains
Long-Term Capital Gains
The rates on long-term capital gains remain at 3.0% and 4.1%; however, the bill does adjust the brackets to match the new ranges for ordinary income.
Montana Earned Income Tax Credit
Finally, the bill increases the Montana earned income tax credit to 20% of the federal earned income tax credit, beginning in tax year 2026.
Wage Withholding and Employer Information
The department will adjust the wage withholding tables and formulas for the upcoming years as needed. We encourage employers and payroll providers to ensure they are using the updated information.
Questions?
For questions, visit our Individual Income Tax page or contact our Call Center at (406) 444-6900.
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