Montana does not have a state income tax on wages or salaries
Montana is one of nine states with no tax on wages, salaries, or most other forms of personal income. If you work in Montana or live there and earn a paycheck, you will not owe state income tax on that money. Federal income tax still applies — that comes out of your paycheck regardless of where you live — but Montana itself does not collect income tax from workers.
This is a permanent feature of Montana's tax code, not a temporary exemption or a recent change. It has been this way since the state's founding. If you are moving to Montana or taking a job there, you can count on this staying in place.
Key Takeaways
- Montana has no state income tax on wages, salaries, or most personal income, though federal income tax still applies.
- Certain types of income — including interest, dividends, and capital gains — may be taxable in Montana depending on the amount and source.
- Montana makes up its tax revenue through property tax, sales tax, and business taxes rather than income tax.
- If you move to Montana from another state, you will not owe Montana income tax on income earned before you arrived.
What types of income Montana does tax
While Montana does not tax wages, it does tax certain other kinds of income. Interest and dividends above a specific threshold are subject to Montana tax. Capital gains — money you make when you sell an asset like stock or real estate — are also taxable in Montana, though the rules depend on how long you held the asset and what kind of gain it is.
The thresholds and rates change year to year, so the exact amount of interest or dividends that triggers a tax bill varies. You will need to check the current Montana Department of Revenue guidance for the year you are filing, or work with a tax preparer who knows Montana's rules. The key point is that if your income comes from a paycheck, you are not affected by these rules.
How Montana funds state services without income tax
Montana collects revenue through property tax, sales tax, and business taxes instead. Property tax is the largest single source of state and local revenue. Sales tax in Montana varies by county but is generally between 0% and 3% at the state level, with local additions on top of that.
Businesses pay corporate income tax and other business-related taxes. This means Montana's tax burden falls differently than in states with income tax — homeowners and shoppers carry more of the load, while wage earners carry less. If you are renting rather than owning property, your tax burden in Montana may be lower than in a state with income tax, depending on the state you are comparing it to.
Moving to Montana from a state with income tax
If you relocate to Montana from a state that has income tax, you will not owe that state's income tax on income earned after you move, as long as you establish Montana residency. You may owe income tax to your former state on income you earned there before the move, depending on when in the year you left and that state's rules.
Montana considers you a resident for tax purposes once you move there with the intent to stay. You do not need to wait a specific number of days or months. However, if you maintain a home in another state or spend significant time there, that state might argue you are still a resident and owe taxes. The safest approach is to document your move — update your driver's license, voter registration, and mailing address — and keep records showing your Montana residence is your primary home.
Remote work and Montana income tax
If you work remotely for a company based in another state but live in Montana, you owe no Montana income tax on your wages. Montana does not tax income earned by residents, regardless of where the employer is located. Your employer will still withhold federal income tax, and you will still file a federal return, but Montana has no claim on that income.
The situation is different if you live in another state and work remotely for a Montana employer. That state may tax your wages even though your employer is in Montana. You would need to check the rules of the state where you live. Montana itself will not tax you in that scenario, but your home state might.
Self-employment income in Montana
If you are self-employed and live in Montana, you do not owe Montana state income tax on your business income. You will owe federal self-employment tax and federal income tax, but Montana does not collect income tax from self-employed people any more than it does from wage earners.
Montana does require business owners to register and pay business taxes, and some business structures pay corporate income tax. A sole proprietor operating under their own name does not pay corporate income tax, but an LLC or S-corporation might, depending on how it is structured. A tax professional familiar with Montana can advise you on the best structure for your situation.
Frequently Asked Questions
Do I have to file a Montana state income tax return?
No. Since Montana has no income tax, there is no state income tax return to file. You will still file a federal return if your income is above the federal threshold, but Montana does not require a state return.
Will Montana ever add a state income tax?
That would require a change to Montana law, which is possible but has not happened. Montana voters and lawmakers have consistently chosen to fund the state through property, sales, and business taxes instead. Any change would be a major policy shift and would be widely publicized.
If I own property in Montana but live elsewhere, do I owe Montana income tax?
No. Montana taxes income, not property ownership. Owning property there does not create an income tax obligation. You may owe property tax on that land, which is separate from income tax, but that is a different calculation.
Does Montana tax retirement income or Social Security?
Montana does not tax Social Security benefits. Retirement income from pensions and 401(k) withdrawals is also not subject to Montana income tax. However, interest and dividends from retirement accounts may be taxable depending on the amount, so check with a tax preparer about your specific situation.