Taxes in Montana: State Tax Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Taxes in Montana: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Montana stands out as one of only five states with no statewide sales tax, making it a haven for consumers. The trade-off is a progressive income tax with a top rate of 5.90% and property taxes that vary significantly by locality. Montana’s recent tax reforms, including rate reductions and bracket simplification, have made the state increasingly competitive in the Mountain West region.
Montana Income Tax Rates (2026)
Montana simplified its income tax system in 2024, moving from seven brackets to two:
| Tax Rate | Taxable Income Range |
|---|---|
| 4.70% | $0 – ~$20,500 |
| 5.90% | Over ~$20,500 |
The same brackets apply to all filing statuses. Montana does not double brackets for married filing jointly.
Prior to 2024, Montana had rates ranging from 1.0% to 6.75%.
Montana Standard Deduction (2026)
| Filing Status | Amount |
|---|---|
| Single | ~$5,540 |
| Married Filing Jointly | ~$11,080 |
| Head of Household | ~$8,310 |
Montana calculates its own standard deduction, which is lower than the federal amount. Taxpayers may choose to itemize if their deductions exceed these amounts. Montana allows most federal itemized deductions, with some modifications.
Notable Montana Tax Credits
- Elderly Homeowner/Renter Credit: Refundable credit for residents 62+ with income below ~$45,000 — up to ~$1,000
- Capital Gains Credit: 2% credit on net capital gains from the sale of qualifying Montana capital assets
- Alternative Energy System Credit: Credit for residential installation of alternative energy systems (solar, wind, geothermal)
- Dependent Care Credit: Based on the federal child and dependent care credit
- Historic Preservation Credit: 25% credit for rehabilitation of certified historic properties
Sales Tax
| Component | Rate |
|---|---|
| State rate | 0.00% |
| Local rate | 0.00% |
| Combined rate | 0.00% |
Montana has no sales tax at any level. This is one of only five states without a statewide or local sales tax. All purchases — from groceries to vehicles to luxury goods — are completely free of sales tax.
However, Montana does impose some targeted excise taxes:
- Lodging facility use tax: 4% on hotel and short-term rental stays
- Rental vehicle tax: 4% surcharge on car rentals
- Marijuana excise tax: 20% on retail cannabis sales
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~0.74% |
| National average | 0.99% |
Montana property taxes are below the national average, though rates vary widely between counties and cities. Property in Montana is assessed at varying percentages of market value depending on the property class (residential land and improvements are assessed at approximately 1.35% of market value).
Exemptions and Programs
- Residential property classification: Residential property is assessed at a lower rate than commercial or agricultural property
- Property Tax Assistance Program (PTAP): Reduces property taxes for low-income homeowners and renters
- Disabled Veterans exemption: Up to ~$100,000 off market value for qualifying veterans
- Montana Elderly Homeowner/Renter Credit: Income-based relief for seniors 62+
Example: A home valued at $400,000 at the ~0.74% effective rate pays approximately ~$2,960 in annual property taxes. A qualifying low-income senior using PTAP could see this reduced significantly.
How Montana Compares to National Averages
| Tax Type | Montana | National Average |
|---|---|---|
| Top income tax rate | 5.90% | ~5.0% |
| Effective rate (~$75K single) | ~5.1% | ~3.5% |
| Sales tax (combined avg) | 0.00% | 6.6% |
| Property tax (effective) | ~0.74% | 0.99% |
| Overall tax burden rank | Below average | — |
Who Benefits from Living in Montana
Montana may work well for:
- Frequent shoppers — Zero sales tax means savings on every purchase, including big-ticket items like vehicles and appliances
- Retirees — Social Security is tax-free, and the Elderly Homeowner/Renter Credit provides property tax relief
- Outdoor enthusiasts and rural homeowners — Low property taxes in rural areas and no sales tax on outdoor equipment
- Remote workers — Moderate income tax, no sales tax, and lower cost of living compared to neighboring states like Washington and Oregon
- Vehicle buyers — No sales tax on vehicle purchases, a significant savings on a $40,000+ vehicle
Montana may be costly for:
- Moderate earners — The 5.90% top rate kicks in at just ~$20,500, meaning most working residents pay the top rate
- Those with high federal itemized deductions — Montana’s standard deduction is low, and some federal deductions are not fully allowed at the state level
- Homeowners in resort communities — Property taxes in areas like Big Sky, Whitefish, and Bozeman tend to be higher due to rising valuations
- High-income earners — While 5.90% is moderate nationally, the low threshold means nearly all income is taxed at the top rate
Montana-Specific Considerations
- No tax on Social Security benefits — Montana fully exempts Social Security income from state tax
- Partial pension exclusion — Montana offers a pension and annuity income exclusion of up to ~$4,640 per person for qualifying residents
- No state estate or inheritance tax — Montana does not impose either tax
- Montana LLC loophole (vehicles) — Some out-of-state residents have formed Montana LLCs to register vehicles and avoid their home state’s sales tax; Montana is aware of this and it may trigger tax issues in the owner’s home state
- Agricultural property assessment — Farm and ranch land is assessed based on its productive capacity rather than market value, providing significant tax savings for agricultural operations
- Resort tax — Certain resort communities can impose a local resort tax (up to 3%) on luxury goods and services
Key Takeaways
- Montana has no sales tax at any level, providing substantial savings for consumers
- The simplified two-bracket income tax tops at 5.90%, but the top rate applies to income above just ~$20,500
- Property taxes at ~0.74% are below the national average, with additional relief programs for seniors and low-income residents
- Social Security is fully exempt from state tax, and a modest pension exclusion is available
- No state estate or inheritance tax
- The standard deduction is lower than the federal amount, increasing taxable income for many filers
Next Steps
- See how Montana compares at State Income Tax Comparison: All 50 States Ranked
- Calculate your federal bracket with the Tax Bracket Calculator 2026
- Explore deductions available to you — Tax Deductions You’re Probably Missing (Itemized vs Standard)
- Find a Montana CPA — Find a CPA Near You
- Consider tax-efficient strategies — Tax Planning Consultation