What Is the Income Tax Rate in Montana?
Navigate Montana's individual income tax system. Understand how your earnings are taxed and what impacts your state tax liability.
Montana operates an individual income tax system that taxes personal earnings. This system is structured progressively, meaning that as an individual’s taxable income increases, higher portions of that income are subject to higher tax rates.
Montana Individual Income Tax Rates and Brackets
Montana employs a graduated income tax system, which means different portions of an individual’s income are taxed at varying rates. For the current tax year, Montana has two primary individual income tax rates: 4.7% and 5.9%. Taxpayers with lower taxable incomes are subject to the 4.7% rate, while those with higher incomes fall into the 5.9% bracket. These rates apply to various income types, including wages, investment earnings, and business profits.
The progressive nature of Montana’s tax system ensures that not all income is taxed at the highest marginal rate an individual might face. Instead, income is taxed incrementally as it falls into successive brackets. For instance, a portion of income up to a certain threshold is taxed at 4.7%, and only the income exceeding that threshold is then taxed at 5.9%. Tax rates and brackets are subject to change annually, and taxpayers should consult the Montana Department of Revenue for the most current figures.
Calculating Your Montana Taxable Income
Determining Montana taxable income involves a series of steps that begin with an individual’s gross income. Gross income encompasses all earnings from various sources, such as wages, salaries, and investment returns. From this total, certain adjustments are made to arrive at the adjusted gross income (AGI). These adjustments can include specific deductions allowed by Montana tax law that reduce the overall income figure.
Following the calculation of AGI, taxpayers can further reduce their income by claiming either a standard deduction or itemized deductions. The standard deduction is a fixed amount that can be subtracted from AGI, simplifying the tax calculation for many. For the 2025 tax year, Montana’s standard deduction is $4,500 for single filers and $11,500 for those married filing jointly, aligning with the federal standard deduction. The resulting amount after these deductions is the Montana taxable income, which is the base figure to which the state’s income tax rates are applied.
Montana Tax Credits and Deductions
Montana offers various tax credits and deductions designed to reduce a taxpayer’s overall liability. A deduction lowers the amount of income subject to tax, while a credit directly reduces the amount of tax owed.
One notable benefit is the Elderly Homeowner/Renter Credit, which can provide a refundable credit of up to $1,150 for eligible individuals aged 62 or older with a household income below $45,000. Another available credit is the Earned Income Tax Credit (EITC), set at 10% of the federal EITC. For property owners, a Property Tax Rebate offers up to $400 for property taxes paid on a principal Montana residence.
Certain energy system credits remain. The Alternative Energy System Credit offers up to $500 for installing recognized non-fossil energy systems in a principal home. A Geothermal Systems Income Tax Credit provides up to $1,500 for installing new geothermal energy systems.
Filing Your Montana Income Tax Return
Filing a Montana individual income tax return involves submitting forms to the Montana Department of Revenue. Most residents use Form 2, the Montana Individual Income Tax Return. Nonresidents and part-year residents use Form 2NR for income earned within the state.
The standard deadline for filing a Montana individual income tax return and paying any taxes due is April 15th of each year. If additional time is needed to file, Montana grants an automatic six-month extension, shifting the filing deadline to October 15th. This extension applies only to filing the return, not to paying any taxes owed, which must still be paid by the original April 15th deadline to avoid penalties and interest.
Returns can be filed electronically through approved software or the Montana Department of Revenue’s TransAction Portal, or by mail. Residents are generally taxed on all income, while nonresidents are taxed only on income sourced within Montana.