Bottom Line
Middle-Class Families: Mixed Tax Picture (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Mixed Tax Picture (Go to the Kiplinger Tax Map for Retirees)
As one might expect, there's both good news and bad news behind Montana's "mixed" tax rankings. You can buy all the jewelry you want tax-free in the Gem State — there's no state sales tax at all, though some resort destinations impose them.
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Income taxes are on the high side, though. That's due in large part to the fact that the top rate kicks in at a relatively low income threshold. But the rate structure is changing in 2024, which will help some taxpayers.
On the property-tax front, the statewide median rate is rather modest. It's in the middle of the pack when compared to median rates in other states.
Montana Income Taxes
Montana Income Tax Range
Low: 1% (on up to $3,300 of taxable income)
High: 6.75% (on taxable income over $19,800)
Beginning in 2024, there will be only two tax rates: 4.7% (on up to $20,500 of taxable income for single filers and $41,000 for married couples filing jointly) and 6.5% (on taxable income over $20,500 for single filers and $41,000 for married couples filing jointly).
Montana Taxation of Social Security Benefits
Social Security benefits are taxable. The method used to calculate the taxable amount for Montana income tax purposes is similar to the method used for federal returns. However, there are important differences. As a result, the Montana taxable amount may be different than the federal taxable amount.
Beginning in 2024, Social Security benefits are taxed by Montana to the same extent they are taxed at the federal level.
Montana Tax Breaks for Other Retirement Income
For 2022, up to $4,640 of income from a retirement plan (including 401(k) plans and IRAs) is exempt for taxpayers with federal adjusted gross income of $40,980 or less ($43,300 or less for joint filers). If married, each spouse can claim the exemption.
In addition, taxpayers age 65 or older can exclude up to $800 ($1,600 for joint filers) of interest income.
Railroad Retirement benefits are also exempt.
Beginning in 2024, the exemptions for retirement plan income and interest income are repealed. Instead, taxpayers age 65 and older will be able to deduct up to $5,500 of any income (adjusted for inflation each year after 2024).
Montana Sales Tax
No state sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.
Montana Real Property Taxes
In Montana, the median property tax rate is $827 per $100,000 of assessed home value.
Montana Property Tax Breaks for Retirees
Any homeowner or renter 62 or older can apply for a refundable income tax credit worth up to $1,150 if they have lived in Montana for nine months, occupied a residence for six months and have a total household income of less than $45,000.
Montana Motor Fuel Taxes
Gasoline: 33.25¢ per gallon.
Diesel: 30.3¢ per gallon.
Montana Sin Taxes
Cigarettes and many little cigars: $1.70 per pack
Moist snuff: $0.85 per pack
Other tobacco products: 50% of the wholesale price
Beer: $0.14 per gallon
Wine: $1.02 per gallon
Liquor: $9.83 per gallon (the liquor tax is an estimate by the Distilled Spirits Council of the United States and published by the Tax Foundation)
Marijuana: 20% state excise tax on retail price, state and local sales tax, and possible local-option excise tax of up to 3% of retail value
Montana Estate and Inheritance Taxes
No estate or inheritance tax.
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