Montana Tax Rates

This post provides an overview of the primary taxes levied at the state level in Montana. The information contained here is intended for general reference. For individuals or businesses seeking comprehensive support with tax filings, compliance, or strategic planning, indinero offers expert services. We encourage all who utilize this summary to explore the tailored tax support available through indinero.

Individual Income Tax

Montana utilizes a graduated state individual income tax system, though legislative changes have reduced the number of brackets and compressed the rates.

  • State Rates (2025): The system has two brackets, with rates ranging from a low of 4.70% to a top marginal rate of 5.90%.
    • The 4.70% rate applies to lower taxable incomes (up to approximately $21,100 for single filers).
    • The 5.90% rate applies to taxable income exceeding that threshold.
  • Retirement Income: Social Security benefits may be partially taxable, depending on the taxpayer’s provisional income, similar to federal rules. Income from pensions, 401(k) distributions, and IRAs is generally taxable.
  • Standard Deduction: Montana offers a standard deduction that reduces the amount of income subject to tax.

Sales and Use Tax

Montana is known for being one of the few states that does not impose a general state or local sales tax.

  • State Rate: The state sales tax rate is 0.0%.
  • Local Sales Tax: Local jurisdictions (counties and cities) cannot impose a general sales tax.
  • Excise Taxes: While there is no general sales tax, the state does levy specific excise taxes on certain products and activities, such as gasoline, cigarettes, alcohol, and certain accommodations. These taxes are collected from wholesalers and are often included in the final retail price.

Property Tax (Ad Valorem Tax)

Property taxes in Montana are collected at both the state and local levels, with the majority of the revenue funding local services like schools, cities, and counties.

  • Assessment: Property is appraised at its market value. Montana uses a classified system where different types of property are assessed at a different percentage of their market value (called the assessment ratio or tax rate for the class).
  • Residential Taxable Value: For most residential property, the assessment ratio is 1.35% of the property’s market value. This low ratio is applied to the market value to determine the taxable value.
  • Tax Calculation: The tax owed is calculated by multiplying the property’s taxable value by the local and state mill rate (set by taxing districts).
  • State Levy: The state levies a separate, fixed number of statewide mills for education and university funding purposes.

Corporate Income Tax

Montana imposes a tax on the net income of corporations that conduct business in the state.

  • Tax Rate: The corporate income tax rate is a flat 6.75% of the corporation’s Montana taxable net income.
  • Water’s-Edge Election: Corporations that make a “water’s-edge election” (limiting the income reported to their U.S. and specific international operations) are subject to a slightly higher rate of 7.0%.
  • Apportionment: For multi-state corporations, income is generally apportioned to Montana using a three-factor formula (property, payroll, and sales) with equal weighting.

Unique and Miscellaneous Taxes

  • No Estate or Inheritance Tax: Montana does not impose a state-level estate tax or inheritance tax.
  • Severance Tax: The state imposes a severance tax on the net proceeds from the extraction of certain mineral and natural resources, such as coal, oil, and gas.

R&D Offer Quiz

Step 1 of 3

Answer to find out if you're eligible for R&D tax credits.

Do the activities performed relate to a new or improved business component’s function, performance, reliability, quality, or composition?(Required)
For Example: A mid-sized packaging company develops a slightly modified cardboard box design to improve its stacking strength (reliability) for warehouse storage, involving minor adjustments to the corrugation pattern to reduce collapse under standard weight loads.
Is your company trying to discover information to eliminate uncertainty concerning the capability or method for developing or improving a business component?(Required)
For Example: A furniture manufacturer investigates whether a cheaper wood adhesive can hold joints as effectively as the current one during assembly, testing bond strength to resolve doubts about its capability in standard production lines.
Do the activities performed constitute a process of experimentation?(Required)
For Example: An auto parts supplier runs a series of bench tests on different lubricant formulations to find one that reduces friction in engine bearings more effectively, systematically comparing wear rates over simulated operating cycles.