Gov. Greg Gianforte signed a pair of bills slashing Montana's top income tax rate and making various changes to the state's tax code during a visit to Kalispell on Thursday, finalizing a major prong of his policy agenda that Republicans say will create jobs and make Montana more competitive with other states in the region.

Gianforte signed one bill cutting the top personal income tax rate from 6.9% to 6.75%, and another bill that will cut it to 6.5% in 2024. The second measure also reduces the number of tax brackets from seven to two, with the lower bracket taxed at 4.7%.

Both pieces of legislation were sponsored by state Sen. Greg Hertz, R-Polson. They are part of a broad suite of tax cuts Gianforte proposed early in the legislative session. GOP lawmakers also passed measures that exempt more businesses from the state's business-equipment tax, create a capital gains tax exemption for entrepreneurs, and offset some local school taxes with marijuana tax revenue and about $10 million annually from the state's general fund.

Together, the cuts are projected to save Montanans $120 million in taxes over the next two years.

The governor signed the income tax bills Thursday afternoon at Thompson Precision, a machining and fabrication company Kalispell, flanked by Hertz; company owners Ray and Steven Thompson; Sen. Mark Blasdel, R-Kalispell; and Scott Ostermann, director of the state Department of Commerce.

Gianforte — who moved from New Jersey to launch a software-development company with his wife in Bozeman in the 1990s — and other Republicans contend Montana has suffered because of its relatively high income taxes.

"Despite all that Montana has to offer, we just haven't been competitive in the Rocky Mountain West," Gianforte said. "Our high tax rates have really driven away businesses. They've gone to states that have lower taxes, like Nevada and Utah. As a result, Montanans have lost out on good-paying jobs."

Democrats note Montana does not have a sales tax, unlike other states in the region. During the legislative session, which ended last week, they also pushed for tax cuts that would more directly benefit lower-income Montanans instead of top earners.

Gianforte noted the highest rate under the old tax code applied to income above $17,400.

"Virtually everybody pays the top bracket, so this is broad-based tax relief," he said. "The majority of Montana taxpayers are going to see relief because of this."

Gianforte also noted the state budget will grow only about three-quarters of 1% annually, much slower than inflation, but said it maintains essential services and includes pay raises for starting teachers, as well as investments in trades education.

"We created a program that's going to allow up to 1,000 scholarships to learn things like machining," he said at Thompson Precision, "so you could work in a place like this and earn a wage that allows you to buy a home in the Flathead. That's the outcome that we want."

Reporter Chad Sokol can be reached at 758-4439 or csokol@dailyinterlake.com