state tax

Montana State Tax Guide

State tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact Montana residents.

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.

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, while 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 $3,100 of taxable income)

High: 6.9% (on taxable income over $18,800)

For 2022, the 1% rate applies to taxable income up to $3,300 and the top rate is 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 2021, up to $4,400 of income from a retirement plan (including 401(k) plans and IRAs) is exempt for taxpayers with federal adjusted gross income of $38,900 or less ($41,100 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Beginning in 2024, the exemptions for retirement plan income and interest income are repealed.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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