This bill proposes to reduce income tax rates specifically for income derived from manufacturing in Montana. It amends sections 15-30-2103 and 15-31-121 of the Montana Code Annotated (MCA) to introduce new tax brackets for net income from manufacturing. The new tax rates will be set at 2.7% for the first $41,000 of net income from manufacturing for married individuals filing jointly, with a rate of 3.9% applied to any income exceeding that threshold. Similar rates are established for heads of households and individual taxpayers, with the first $30,750 and $20,500 of net income from manufacturing taxed at 2.7%, and any excess taxed at 3.9%. Additionally, the bill specifies that the percentage of net income from manufacturing to be paid under section 15-31-101 is set at 5.75%.

The bill also includes definitions for "manufacturing," clarifying it as the mechanical, physical, or chemical transformation of materials into new products or the assembly of component parts for purposes other than construction. The changes will take effect for income tax years beginning after December 31, 2025. The legislation aims to incentivize manufacturing in Montana by lowering the tax burden on businesses in this sector.

Statutes affected:
LC Text: 15-30-2103, 15-31-121