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 |
Montana Standard Deduction
Confirm the current-year standard deduction amounts with the Montana Department of Revenue, as this figure is inflation-indexed and was not independently re-verified against a live Montana source this session.
Montana Tax Calculation Examples (Illustrative)
Single filer earning $60,000:
- Gross income: $60,000
- Standard deduction (illustrative, confirm current amount): −$14,580
- Taxable income: ~$45,420
- Tax calculation:
- $20,500 × 4.7% = $964
- $24,920 × 5.9% = $1,470
- Total Montana tax (illustrative): ~$2,434
- Effective rate on gross income: ~4.1%
Married couple earning $100,000:
- Gross income: $100,000
- Standard deduction (illustrative, confirm current amount): −$29,160
- Taxable income: ~$70,840
- Tax calculation:
- $41,000 × 4.7% = $1,927
- $29,840 × 5.9% = $1,761
- Total Montana tax (illustrative): ~$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. These federal thresholds have not been inflation-indexed by Congress since they were set decades ago.
This is a meaningful disadvantage compared to states that have fully exempted Social Security.
Pension and Retirement Income Exclusion
Montana provides a pension income exclusion for residents age 65 and older. Confirm the current-year exclusion amounts with the Montana Department of Revenue, as this figure is inflation-indexed and was not independently re-verified this session.
Eligible income includes qualified pension payments from public and private plans. This exclusion is modest compared to states with a full retirement income exemption.
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 for large purchases like vehicles, home appliances, and building materials.
Note: Montana does not have a local option sales tax either — cities and counties cannot levy one.
Montana Property Tax
Confirm the current average effective property tax rate with the Montana Department of Revenue or Tax Foundation, as this figure was not independently re-verified this session. Montana’s property taxes have historically been below the national average, but rapidly rising home values in resort towns have pushed annual tax bills higher in dollar terms even at stable millage rates.
Primary Residential Exemption
Montana provides a reduction in the taxable value of a primary residence compared to other residential property. Confirm the current percentage with the Montana Department of Revenue, as this figure has been adjusted by recent legislation.
Property Tax Assistance Program
Montana offers a Property Tax Assistance Program (PTAP) for lower-income homeowners that reduces the effective property tax rate. Confirm current income thresholds with the Montana Department of Revenue.
Montana vs. Northwestern States
| State | Top Income Tax (confirm current figures) | Sales Tax | Avg. Property Tax (confirm current) |
|---|---|---|---|
| Montana | 5.9% | 0% | Confirm current rate |
| Idaho | 5.3% (cut from 5.695% by HB 40) | 6% | Confirm current rate |
| Wyoming | 0% | 4% | Confirm current rate |
| Oregon | 9.9% | 0% | Confirm current rate |
| Washington | 0% | 6.5% | Confirm current rate |
| Colorado | 4.4% flat | 2.9% + local | Confirm current rate |
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.
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.
Filing Requirements
Confirm the current filing thresholds by filing status with the Montana Department of Revenue, as these figures are inflation-indexed and were not independently re-verified this session.
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 states with a full exemption
- Home prices in Bozeman, Missoula, and Whitefish have risen dramatically; affordability has eroded
- Winters are severe; some areas are quite rural with limited services
- 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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