Montana completed a major income tax overhaul in 2024, replacing a seven-bracket system with a streamlined two-bracket system: 4.7% and 5.9% — cutting the top rate from 6.9%. Combined with no state sales tax (one of only five such states in the country), Montana offers a competitive tax environment for workers and retirees alike. The key caveat for retirees: unlike many states that have moved to exempt Social Security income, Montana still taxes Social Security benefits at the state level using the federal formula.
Montana Income Tax Rates 2026
Montana simplified its income tax to two brackets effective tax year 2024:
Single Filers
| Taxable Income | Rate |
|---|---|
| $0 – $20,500 | 4.7% |
| Over $20,500 | 5.9% |
Married Filing Jointly
| Taxable Income | Rate |
|---|---|
| $0 – $41,000 | 4.7% |
| Over $41,000 | 5.9% |
Bracket thresholds may be adjusted for inflation annually — verify with the Montana Department of Revenue for the exact 2026 figures.
Before and After Tax Reform
| System | Top Rate | Bracket Count |
|---|---|---|
| Old (through 2023) | 6.9% | 7 brackets |
| New (2024 onward) | 5.9% | 2 brackets |
The previous rates ranged from 1% on the lowest income to 6.9% at the top. For most Montana taxpayers, the new system both reduces the top marginal rate and simplifies the calculation considerably.
Montana Standard Deduction
Montana’s standard deduction under the reformed system:
| Filing Status | Standard Deduction |
|---|---|
| Single | $14,580 |
| Married Filing Jointly | $29,160 |
| Head of Household | $21,870 |
These amounts are indexed to inflation and may be adjusted annually.
Montana Tax Calculation Examples
Single filer earning $60,000:
- Gross income: $60,000
- Standard deduction: −$14,580
- Taxable income: $45,420
- Tax calculation:
- $20,500 × 4.7% = $964
- $24,920 × 5.9% = $1,470
- Total Montana tax: $2,434
- Effective rate on gross income: 4.1%
Married couple earning $100,000:
- Gross income: $100,000
- Standard deduction: −$29,160
- Taxable income: $70,840
- Tax calculation:
- $41,000 × 4.7% = $1,927
- $29,840 × 5.9% = $1,761
- Total Montana tax: $3,688
- Effective rate on gross income: 3.7%
Social Security: Partially Taxable
Montana taxes Social Security income following the federal formula. The same income thresholds and percentage calculations that determine how much of your Social Security is taxable federally also apply to Montana:
| Combined Income (Single) | Taxable SS Percentage |
|---|---|
| Below $25,000 | 0% |
| $25,000 – $34,000 | Up to 50% |
| Over $34,000 | Up to 85% |
| Combined Income (Married) | Taxable SS Percentage |
|---|---|
| Below $32,000 | 0% |
| $32,000 – $44,000 | Up to 50% |
| Over $44,000 | Up to 85% |
Combined income = AGI + non-taxable interest + 50% of Social Security benefits
This is a meaningful disadvantage compared to states that have fully exempted Social Security. A retiree with $30,000 in SS and $30,000 in IRA distributions would pay Montana income tax on a portion of their SS income, while the same retiree in Nebraska or West Virginia would pay nothing on the SS portion.
Pension and Retirement Income Exclusion
Montana provides a pension income exclusion for residents age 65 and older. This exclusion reduces the amount of eligible retirement income subject to Montana state income tax:
| Filing Status | Annual Exclusion (Age 65+) |
|---|---|
| Single | ~$4,370 |
| Married Filing Jointly | ~$8,740 |
The exclusion amount is indexed for inflation and may be slightly higher in 2026 — verify with the Montana Department of Revenue.
Eligible income includes qualified pension payments from public and private plans. IRA distributions and 401(k) withdrawals may also qualify depending on their nature. This exclusion is modest compared to states like Mississippi (full retirement income exemption) or Delaware ($12,500 at age 60+).
Military Retirement
Montana exempts military retirement pay from state income tax — full exemption for all qualifying retired military pay, separate from and in addition to the pension exclusion above.
No Sales Tax: A Key Montana Advantage
Montana is one of just five states with no sales tax at any level. This has real financial impact:
| Purchase | 7% Sales Tax State Cost | Montana Savings |
|---|---|---|
| New $35,000 car | $2,450 in tax | $2,450 saved |
| $8,000 kitchen appliances | $560 in tax | $560 saved |
| $1,200 laptop | $84 in tax | $84 saved |
Montana residents who make large purchases — vehicles, home appliances, building materials — realize substantial savings compared to residents of neighboring states. Idaho, Wyoming, and North Dakota all have sales taxes; Montana’s border residents from those states sometimes cross into Montana specifically to make large tax-free purchases.
Note: Montana does not have a local option sales tax either — cities and counties cannot levy one.
Montana Property Tax
| Metric | Montana |
|---|---|
| Average effective rate | ~0.84% |
| National average | ~1.10% |
| On a $300,000 home | ~$2,520/year |
| On a $500,000 home | ~$4,200/year |
Montana’s property taxes are below the national average — but the state’s rapidly rising home values in resort towns have pushed annual tax bills higher in dollar terms. Bozeman and Missoula in particular have seen home prices nearly double over the past decade, meaning a property that was cheap to hold a decade ago now carries a much larger tax bill.
Montana Property Tax Classes
Montana assesses residential property at a specific rate of assessed value. The Department of Revenue sets the market value and applies the applicable class rate. Tax levies vary by county.
Primary Residential Exemption
Montana provides a 34% reduction in the taxable value of a primary residence compared to other residential property. This is built into the tax calculation automatically for owner-occupied homes.
Property Tax Assistance Program
Montana offers a Property Tax Assistance Program (PTAP) for lower-income homeowners (under $37,500 single / $45,000 married in income) that reduces the effective property tax rate. Qualifying seniors on fixed incomes may see significantly lower effective rates.
Montana vs. Northwestern States
| State | Top Income Tax | Sales Tax | Avg. Property Tax |
|---|---|---|---|
| Montana | 5.9% | 0% | ~0.84% |
| Idaho | 5.8% | 6% | ~0.67% |
| Wyoming | 0% | 4% | ~0.55% |
| Oregon | 9.9% | 0% | ~0.86% |
| Washington | 0% | 6.5% | ~0.84% |
| Colorado | 4.4% flat | 2.9% + local | ~0.48% |
Montana’s most direct comparison is with Oregon — both have no sales tax and progressive income taxes. Oregon’s top rate of 9.9% is significantly higher than Montana’s 5.9%. Wyoming has the most favorable overall tax environment in the region (no income tax, modest sales tax) but lacks Montana’s natural scenery and outdoor culture that draws many residents.
Capital Gains
Montana taxes capital gains as ordinary income at the two-bracket rates. There is no preferential rate for long-term capital gains at the state level:
| Gain Type | Montana Rate |
|---|---|
| Short-term gains | 4.7% or 5.9% |
| Long-term gains | 4.7% or 5.9% |
This is unlike federal law, which provides lower rates on long-term gains. A significant stock or property sale in Montana will be taxed at the full bracket rate on top of federal capital gains taxes.
Local Income Tax
Montana has no local or city income taxes. The two-bracket state income tax is the only income tax Montana residents pay.
Montana Estate and Inheritance Tax
Montana has no estate tax and no inheritance tax. Assets pass to heirs free of state death taxes regardless of estate size. This is consistent with the majority of states; only a minority still maintain estate or inheritance taxes.
Filing Requirements
| Filing Status | Filing Threshold |
|---|---|
| Single | $5,090 |
| Married Filing Jointly | $10,170 |
| Non-resident | Any Montana source income |
Filing deadline: April 15. Montana grants automatic six-month extensions.
Electronic filing is available through the Montana Department of Revenue’s TransAction Portal.
Who Should Consider Montana?
Good fit for:
- Workers and high spenders who benefit most from no sales tax
- Military retirees — full exemption on retirement pay
- Outdoor enthusiasts who prioritize lifestyle (access to national parks, public lands, skiing, hunting, fishing)
- Those moving from Oregon or California seeking lower overall taxes
- Remote workers who can live anywhere — Montana’s natural amenities are world-class
Consider before moving:
- Social Security is partially taxable — unlike Nebraska, West Virginia, or Mississippi
- Home prices in Bozeman, Missoula, and Whitefish have risen dramatically; affordability has eroded
- Winters are severe; some areas are quite rural with limited services
- Property tax bills can be high in dollar terms in high-value areas despite moderate effective rates
- For pure tax efficiency, Wyoming (no income tax) or Idaho (lower rates) may be more favorable
For a side-by-side comparison of every state’s income tax rates, see state income tax rates by state 2026 and best and worst states for taxes 2026. Federal income tax applies on top of state taxes — see 2026 federal income tax brackets to calculate your combined liability.
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