Overview of Montana Taxes
Montana has a progressive income tax system with seven income brackets and rates ranging from 1% to 6.9%. All taxpayers in Montana are subject to the same brackets regardless of their tax filing status. No cities in the state levy local income taxes.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
|Take Home Salary||--%||$--|
- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Montana Paycheck Quick Facts
How Your Montana Paycheck Works
If you are legally employed in the Treasure State, you can expect your employer to withhold FICA and federal income taxes from your paychecks. Medicare and Social Security taxes together make up FICA taxes. You pay into these systems now so you can receive the benefits when you are retired. You pay 1.45% of your wages in Medicare tax and 6.2% in Social Security tax. Your employer matches your contribution so the total rates are doubled. If you earn more than $200,000, your wages in excess of $200,000 will be subject to a 0.9% Medicare surtax, which your employer does not match. Keep in mind if you are self-employed, you are responsible for paying the total 2.9% in Medicare tax and 12.4% in Social Security tax yourself.
How much gets withheld in federal income tax varies from person to person and is dependent on a number of factors including your marital status, how many allowances you claim, if you have opted to have additional tax withheld from your paycheck, as well as how high your salary is. Your employer looks to the information that you provide on your W-4 form to determine how much should be taken out of your paycheck for taxes.
Withholding calculations have changed for the 2018 tax year because of the tax plan that President Trump signed into law in December 2017. The IRS released updated tax withholding guidelines in January and taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, taxpayers do not need to fill out a new W-4. Employers will use the withholdings on your current form.
Besides FICA and federal taxes, you can elect to have certain monies withheld from your paycheck. If you have employer-sponsored health or life insurance or you save money for retirement in a 401(k) account or you contribute to a Flexible Spending Account, the money you put into these benefits will all be subtracted from your salary before it hits your bank account.
Montana Median Household Income
|Year||Median Household Income|
Montana’s state income tax system is progressive, meaning that higher earners are taxed more than lower earners. The tax brackets in Montana are the same for all filers regardless of filing status. The first $2,900 you earn in taxable income is taxed at 1%. The rate jumps to 2% up to $5,200; 3% up to $7,900; 4% up to $10,600; 5% up to $13,600; 6% up to $17,600 and 6.9% on taxable income over $17,600.
No Montana cities levy local income taxes, so taxpayers only have to worry about state and federal taxes. Not a Montana taxpayer yet, but planning a move to the Big Sky State? Or relocating within the state and looking into getting a mortgage? Take a look at our Montana mortgage guide for information about rates and getting a mortgage in the state.
Income Tax Brackets
|Montana Taxable Income||Rate|
|$0 - $2,900||1.00%|
|$2,900 - $5,200||2.00%|
|$5,200 - $7,900||3.00%|
|$7,900 - $10,600||4.00%|
|$10,600 - $13,600||5.00%|
|$13,600 - $17,600||6.00%|
How You Can Affect Your Montana Paycheck
If you are looking to save on how much you pay in taxes in Big Sky Country and you don’t mind receiving smaller paychecks, you can contribute more money to a retirement account like a 401(k) or 403(b). Not only are you putting money away that you can enjoy down the road, but since money that goes into a 401(k) or 403(b) comes out of your paycheck before taxes are deducted, you are actually lowering your taxable income which in turn lowers how much you have to pay in taxes.
Along the same lines, you can use pretax monies to take advantage of a Health Savings Account or Flexible Spending Account if your employer offers them. You can pay for medical-related expenses like prescriptions or co-pays from these accounts, but keep in mind that they do not roll over from year to year. In other words, you need to actually use whatever you put in a HSA or FSA or you’ll lose those funds.
It might seem counterproductive to opt to receive less money in your paycheck but remember you are setting aside cash you would spend anyway and avoiding paying taxes on it.
Montana Top Income Tax Rate
|Year||Top Income Tax Rate|
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics