More than 32,000 Montana businesses will see a reduction in unemployment insurance (UI) tax rates in 2026, resulting in over $23 million in savings, the Montana Department of Labor & Industry announced.
“By reforming our tax code and cutting back the thicket of red tape tying up job creators, we’re helping Montana businesses grow and attracting investment to the Treasure State,” Gov. Greg Gianforte said. “Montana remains one of the best places in the country to start and own a small business. We’ll continue to make meaningful improvements to support business owners and the good-paying jobs they create.”
The tax reductions follow a 2024 review of the UI trust fund ordered by DLI Commissioner Sarah Swanson. The analysis confirmed that Montana’s UI system is well-designed and that the trust fund is healthy enough to support lower tax rates while remaining actuarially sound during economic downturns.
To codify the reductions, the Montana Legislature passed House Bill 210 during the 2025 session, sponsored by Rep. Steve Fitzpatrick, R-Great Falls, which Governor Gianforte signed into law. The bill created an automatic trigger to lower tax rates when the trust fund balance exceeds 2.8% of total wages from the previous fiscal year.
“HB 210 made the UI system more efficient and predictable for the employers who fund it – producing significant tax savings – without reducing the UI benefits that Montana workers rely on,” said Commissioner Swanson. “We will continue modernizing UI so it supports workers when they need it and keeps employer costs fair and reasonable.”
Under the new rates for 2026, 32,873 employers will see a 0.20 percentage point reduction in their UI tax rate. Additionally, more than 7,100 employers will receive a zero percent tax rate. Individual employers will begin receiving their 2026 tax rate classification letters next week.
Montana’s UI system is consistently rated among the top in the nation because taxes and benefits are based on actual average wages, allowing the trust fund to avoid overcollection while maintaining solvency.
Governor Gianforte has also implemented broader business-friendly reforms, including adjustments to the business equipment tax, lowering Montana’s capital gains tax rates to the fourth-lowest in the country, investing in workforce development and trades education, advancing affordable housing initiatives, reducing regulatory burdens, and making historic infrastructure investments.