Montana State Tax Rate

Montana uses a graduated state income tax system, but it’s much simpler than most states.

For the 2026 & 2027 tax years, there are just two tax rates: 4.7% and 5.9%.

The key thing to understand is that, like all progressive systems, only the income within each bracket is taxed at that rate.

Montana State Income Tax Brackets

Single Filers and Married Filing Separately

• $0 to $21,100 → 4.7%
• $21,100+ → 5.9%

Married Filing Jointly

• $0 to $42,200 → 4.7%
• $42,200+ → 5.9%

Head of Household

• $0 to $31,700 → 4.7%
• $31,700+ → 5.9%

How Montana’s Tax System Works

Montana’s system is progressive, but very streamlined, with only two brackets. That makes it easier to estimate your taxes compared to states with many brackets.

Example: If you earn $50,000 as a single filer, the first $21,100 is taxed at 4.7%, and the remaining income is taxed at 5.9%, which keeps your overall tax rate lower than the top rate.

Marginal vs Effective Tax Rate

Understanding this difference helps avoid confusion.

• Marginal rate = the highest rate your income reaches
• Effective rate = the average rate you actually pay

Example: Even if you fall into the 5.9% bracket, your effective tax rate may be closer to 5% depending on how your income is distributed across the lower bracket.

What Income Is Taxed in Montana

Montana taxes most types of income, including:

• Wages and salaries
• Self-employment income
• Investment income
• Retirement income (including some Social Security)

One major difference from many states:

• Montana has no statewide sales tax, which can offset the impact of income taxes

Are Montana Taxes High?

Compared to other states:

• The top rate of 5.9% is moderate
• The system is simple with only two brackets
• No statewide sales tax reduces the overall tax burden

For many taxpayers, Montana falls into the middle-of-the-pack in overall tax burden.

Future Tax Changes (Important)

Montana is actively lowering taxes:

• Top rate expected to drop to around 5.65% in 2026
• Further reduction to around 5.4% planned for 2027

This means taxes may decrease slightly in future years.

Electronic Filing Recommendation 💻

• File electronically to reduce errors and processing delays
• Tax software automatically calculates Montana’s two-tier system
• Double-check income thresholds to avoid overpaying
• E-filing helps you receive refunds faster and ensures accuracy

Summary

Montana’s state income tax is simple, with just two brackets ranging from 4.7% to 5.9%. Most taxpayers will pay a blended rate due to the progressive structure.

With no statewide sales tax and planned rate reductions, Montana remains a relatively tax-friendly state overall.