About Montana State Income Tax

Montana uses a progressive tax system with five tax brackets. Montana offers a balanced approach to state taxation with moderate rates that are competitive within the region.

Montana Tax Brackets 2026

• $0 - $3,500: 4.7%
• $3,501 - $9,000: 5.1%
• $9,001 - $13,000: 5.3%
• $13,001 - $25,000: 5.5%
• Over $25,000: 5.9%

How Montana Tax is Calculated

Montana's progressive tax system works as follows:

1. Income is divided into five tax brackets
2. Each bracket is taxed at its corresponding rate
3. Higher earners pay the top rate of 5.9%
4. Standard deduction reduces taxable income

Montana Tax Features

• Moderate Top Rate: 5.9% is reasonable compared to neighboring states
• Five Brackets: More granular tax brackets than some states
• Retirement Friendly: Social Security not taxed, military retirement exempt
• Big Sky Country: Low cost of living combined with reasonable tax rates

Frequently Asked Questions

What is Montana's income tax rate?

Montana has progressive tax rates from 4.7% to 5.9%. The top rate of 5.9% applies to income over $25,000, making Montana's top rate relatively competitive with other states in the region.

Does Montana tax retirement income?

Montana offers some favorable treatment for retirement income. Social Security benefits are not taxed, and military retirement pay is exempt from state taxation. Pension income may receive preferential treatment under certain conditions.

Does Montana tax Social Security?

No, Montana does not tax Social Security retirement benefits, which is favorable for retirees relying on these benefits as a primary income source.

How does Montana compare to neighboring states?

Montana (5.9%) is competitive: Wyoming (0%), Idaho (5.8%), Washington (0%), and North Dakota (2.9%). Montana's rates are reasonable within the Northwest region.

Montana vs. Neighboring States

Tax comparison with surrounding states:

• Wyoming: No state income tax
• Idaho: Progressive up to 5.8%
• Washington: No state income tax
• North Dakota: Progressive up to 2.9%

Tips for Montana Taxpayers

• Montana's moderate rates make it competitive for retention of talent and residents
• Take advantage of Social Security exemption if applicable
• Military retirees can claim full exemption on military retirement income
• Utilize five tax brackets to understand your marginal tax rate
• Combine tax benefits with Montana's outdoor lifestyle and lower cost of living