State-by-State Guide to Taxes on Retirees - Montana
Tool | November 2019

State-by-State Guide to Taxes on Retirees

Montana

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The Bottom Line
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Not Tax-Friendly

The Treasure State is one of five states that do not impose a general state sales tax. That’s the good news. The bad news is that Montana taxes virtually all forms of retirement income, including Social Security. The state allows a pension- and annuity-income exemption of up to $4,110 per person, subject to certain income limitations. Residents 65 and older can exclude up to $800 for single filers (up to $1,600 for married filers) of interest income from state taxes.

On the property-tax front, rates are modest, on average, and any homeowner or renter 62 or older with total household income of less than $45,000 can apply for a refundable income tax credit worth up to $1,000.

State Sales Tax

No state sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.

Income Tax Range

Low: 1% (on up to $3,000 of taxable income)

High: 6.9% (on taxable income over $17,900). Montana permits filers to deduct some of their federal income tax.Effective tax rate: 4.62% for single filers, 6.43% for joint filers

Social Security

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.

Exemptions for Other Retirement Income

Up to $4,180 of income from a retirement plan (including 401(k) plans and IRAs) is exempt for taxpayers with federal adjusted gross income of $36,910 or less ($39,000 or less for joint filers). (All dollar amounts are for the 2018 tax year.) 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.

Property Taxes

In Montana, residents pay an average of $892 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: Any homeowner or renter 62 or older can apply for a refundable income tax credit worth up to $1,000 if they have lived in Montana for nine months, occupied a residence for six months and have a gross household income of less than $45,000.

Vehicle Taxes

While there is no state sales tax at registration, county option taxes may be due.

Inheritance and Estate Taxes

None.

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