Montana Tax Calculator 2026

Montana Tax Overview

Montana Income Tax Brackets 2026

Montana uses a graduated income tax system with rates ranging from 1% to 6.75%. The state has seven tax brackets, with the top rate applying to taxable income over approximately 9,800. Montana underwent significant tax reform in recent years, and the legislature has considered further simplification including a potential move toward a flatter rate structure. The current system, however, retains its graduated nature with meaningful rate differences across brackets.

Montana is one of the few states that allows taxpayers to itemize deductions on their state return even if they take the standard deduction on their federal return. The state also offers its own standard deduction of approximately ,540 for single filers and 1,080 for married filing jointly. Montana does not have a local income tax at the city or county level.

Montana Capital Gains Tax Credit

Montana offers a capital gains tax credit that can reduce the tax on certain capital gains. Gains from the sale of capital assets held for more than 12 months and acquired after 2006 may qualify for a credit that effectively reduces the tax rate on those gains. The credit rate is 2% of the net capital gain, which means the effective top rate on qualifying long-term capital gains is approximately 4.75% rather than 6.75%. This is a significant benefit for investors and business owners who realize substantial capital gains.

Montana Has No Sales Tax

Montana is one of only five states in the United States that does not levy a statewide sales tax. The other four are Alaska, Delaware, New Hampshire, and Oregon. Unlike Alaska, which allows local governments to impose their own sales taxes, Montana has no sales tax at any level — state, county, or municipal. This means every purchase in Montana, from groceries to vehicles to luxury goods, is completely free of sales tax.

The absence of sales tax has several notable effects on life in Montana. Border communities near states like Idaho (6% state sales tax) and Wyoming (4% state sales tax) attract significant cross-border shopping. Towns like Billings, Missoula, and Kalispell see shoppers from neighboring states making large purchases. The lack of sales tax also makes Montana a popular state for purchasing vehicles, boats, and recreational vehicles, though buyers should be aware that their home state may impose a use tax when the item is registered there.

To compensate for the absence of sales tax revenue, Montana relies more heavily on income taxes, property taxes, natural resource extraction taxes (particularly on coal, oil, and gas), and tourism-related taxes such as its lodging facility use tax of 4% and a 3% car rental tax. Montana also has a resort tax of up to 3% that applies in certain designated resort communities, including Big Sky, Red Lodge, Virginia City, West Yellowstone, and Whitefish.

Montana Property Tax

Montana s effective property tax rate is approximately 0.74%, which is below the national average. Montana uses a unique classification system for property assessment. Residential property is assessed at approximately 1.35% of its market value, and the tax rate is then applied to this assessed value. This means the effective tax burden is significantly lower than the nominal mill levy rates might suggest.

Property taxes in Montana are assessed and collected at the county level, with rates varying considerably across the state. Urban areas like Missoula and Gallatin counties tend to have higher effective rates due to greater demand for public services, while rural agricultural counties may have lower rates. Montana offers a property tax assistance program for low-income homeowners and renters, as well as property tax exemptions for veterans, disabled individuals, and certain agricultural land.

Montana Natural Resource and Energy Taxes

Montana has a long history of taxing its abundant natural resources, dating back to its copper mining days. Today, the state levies extraction taxes on oil, natural gas, coal, and other minerals. The oil production tax ranges from 0.5% to approximately 14.8% depending on the type of well and its production stage. Coal severance tax is levied at rates up to 15% for surface-mined coal, one of the highest coal tax rates in the nation. These resource taxes provide significant revenue and help compensate for the absence of a sales tax.

Montana vs. Neighboring States

Montana s tax profile is unique among its neighbors, primarily because of the no-sales-tax advantage:

• Wyoming — No income tax, 4% state sales tax, 0.56% property tax. Wyoming has no income tax but does have a sales tax that Montana lacks. Good for high earners; Montana is better for high spenders.
• Idaho — 5.695% flat income tax, 6% state sales tax, 0.63% property tax. Idaho taxes both income and sales, making Montana more attractive for shoppers despite Montana s higher top income tax rate.
• North Dakota — 0%-2.5% graduated income tax, 5% sales tax, 0.94% property tax. North Dakota has much lower income tax rates but charges sales tax. Best for high earners.
• South Dakota — No income tax, 4.2% state sales tax, 1.14% property tax. No income tax is a major advantage, but sales and property taxes are both higher than Montana s.

Use our state comparison calculator to see exactly how much you could save by comparing Montana to a neighboring state.