State taxes: Montana

Montana collects state taxes at rates ranging from 1% to 6.9%, assessed over 7 income brackets. More on Montana taxes can be found in the tabbed pages below.

Personal income tax

Montana’s income tax system covers 7 income brackets:

• 1% on the first $2,800 of taxable income.
• 2% on taxable income between $2,801 and $5,000.
• 3% on taxable income between $5,001 and $7,600.
• 4% on taxable income between $7,601 and $10,300.
• 5% on taxable income between $10,301 and $13,300.
• 6% on taxable income between $13,301 and $17,100.
• 6.9% on taxable income of $17,101 and above.

Montana tax returns are due April 15 or the next business day if that date falls on a weekend or holiday.

Effective Jan. 1, 2008, royalty payments made to owners of Montana mineral rights are subject to state income tax withholding if certain thresholds are met. This amount is in addition to production taxes that also are taken out of royalty payments.

Sales taxes

Montana has no sales tax at either the state or local levels.

It does, however, allow for resort and local option taxes as a funding source for some communities. The fundamental idea behind resort taxes is to allow places with high numbers of visitors, but relatively few residents, to finance local infrastructure costs without overburdening local citizens.

Montana also has a “bed tax” of 4% on overnight lodging that supports the state’s tourism promotion efforts and also contributes funds to state parks, historic sites and other important programs.

Personal and real property taxes

The property assessment division of the Montana Department of Revenue is responsible for administering Montana’s property tax laws, including the valuation and assessment of real and personal property throughout the state for property tax purposes.

In Montana, household goods are exempt from property taxes. However, property taxes are assessed on farm machinery, heavy equipment, automobiles, trucks and business equipment. A per capita fee also is collected on livestock.

The amount of property tax owed is not determined solely by the property’s value. The property’s value is multiplied by a tax rate, set by the Montana Legislature, to determine its taxable value. The taxable value is then multiplied by the mill levy established by various taxing jurisdictions — city and county governments, school districts, and others.

The state does offer, however, a variety of property tax relief and exemptions.

Inheritance and estate taxes

Montana’s inheritance tax was repealed on Dec. 31, 2000.

Montana’s estate tax is equal to the maximum credit allowed against the federal estate tax. Since federal tax law changes have eliminated the state credit for deaths occurring in 2005, no Montana estate tax is imposed and no estate tax return is required for deaths occurring after Jan. 1, 2005.

Other Montana tax facts

Montana offers its residents several ways to contribute to nonprofit groups with tax form checkoffs.

Free filing of state forms is available to some Montana residents at Montana Free File.

Montana does not assess tax on intangible personal property.

For more information regarding state taxes, residents may contact the Montana Department of Revenue at (406) 444-6900 or its website.

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