Overview of Montana Taxes
Montana has a progressive state income tax, with a top rate of 6.75%. Montana has only a few other types of taxes. There is no sales tax in the state and property taxes are below the national average.
Number of State Personal Exemptions
Your Income Taxes Breakdown
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|Total Income Taxes|
|Income After Taxes|
* These are the taxes owed for the 2022 - 2023 filing season.
Your 2022 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2022 Tax Burden
Income Tax $
Sales Tax $
Fuel Tax $
Total Estimated Tax Burden $
Percent of income to taxes = %
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Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions. Also, we separately calculate the federal income taxes you will owe in the 2020 - 2021 filing season based on the Trump Tax Plan.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2023...read more
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
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Taxes in Montana
Montana State Tax Quick Facts
- Income tax: 1% - 6.75%
- Sales tax: None
- Property tax: 0.74% average effective rate
- Gas tax: 33 cents per gallon of regular gasoline, 29.75 cents per gallon of diesel
Montana is a relatively taxpayer-friendly state. There are no sales taxes in Big Sky Country and property taxes are below the national average, with an average effective rate of just 0.74%. The state does have a personal income tax, though, with rates ranging from 1% to 6.75%. That bottom rate is relatively low on average, but the top rate is fairly high. To offset income taxes, however, Montana offers a number of tax credits, including a credit for capital gains.
A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Montana Income Taxes
The Montana state income tax is progressively structured, with higher rates for higher income earners. As shown in the table below, rates range from 1% to 6.75%.
Income Tax Brackets
|Montana Taxable Income||Rate|
|$0 - $3,100||1.00%|
|$3,100 - $5,800||2.00%|
|$5,800 - $8,900||3.00%|
|$8,900 - $12,000||4.00%|
|$12,000 - $15,400||5.00%|
|$15,400 - $19,800||6.00%|
To calculate income taxes, Montana taxpayers should begin with their federal adjusted gross income (AGI). That number may include some types of income that are not taxable in Montana and need to be subtracted.
Social Security income, unemployment compensation, state income tax refunds, interest from federal bonds or notes, some pension income and active duty military income are among the types of income that can be subtracted from federal AGI when calculating taxable income in Montana.
Itemized deductions are allowed in Montana and there are a number of deductions in Montana that are not available federally. The deduction for federal income tax payments allows taxpayers to deduct all of the income tax payments they made over the past year (including withholding taxes); this deduction can be as much as $5,000 for single filers or married people filing separately, or $10,000 for joint filers. Political contributions can also be deducted, up to $100 for you and another $100 for your spouse.
For filers who do not claim itemized deductions, the standard deduction in Montana is equal to 20% of adjusted gross income, within a minimum and maximum boundary. The minimum standard deduction is $4,280 for joint filers and heads of household and $2,140 for singles and married people filing separately. On the other hand, the maximum standard deduction is $9,660 for joint filers and heads of household, and $4,830 for singles and married people filing separately.
The personal exemption in Montana is $2,580. Exemptions can be claimed for you, your spouse and any dependents. Each exemption reduces your taxable income by the personal exemption amount.
In addition to deductions and exemptions, Montana offers credits to reduce the total tax burden of taxpayers in certain circumstances. Those credits include the credit for income taxes paid to another state, the college contribution credit, the qualified endowment credit, the energy conservation installment credit, the alternative fuel credit, the elderly care credit, the recycle credit and the capital gains credit (described in the next section).
Montana Capital Gains Tax
While Montana does tax capital gains, the state offers the capital gain tax credit to offset the cost. The credit is equal to 2% of all net capital gains listed on your Montana income tax return. In effect, that lowers the top capital gains tax rate in Montana from 6.9% to 4.9%.
Montana Sales Tax
There is no state sales tax in Montana. Goods and services can be purchased sales-tax-free, though “sin” taxes on alcohol and cigarettes do apply.
Montana Alcohol Tax
While there is no sales tax in Montana, the state does collect excise taxes on alcoholic beverages. These are typically collected from the wholesaler and not at the point of sale, so they may not appear on your receipt. Instead, they will be directly included in the price. The tax varies depending on the beverage type and alcohol content. Beer is taxed at a rate of 14 cents per gallon, liquor is taxed at a rate of $9.74 per gallon and wine is taxed at a rate of $1.06 per gallon.
Montana Cigarette Tax
As with alcohol, Montana levies an excise tax on cigarettes. The tax is $1.70 per pack. The state collects the tax from wholesalers, who must then attach decals to each pack of cigarettes sold as proof of payment. Because wholesalers pay the tax, it is already included in the price that consumers pay.
Montana Property Tax
Although property taxes primarily support local governments and services in Montana, the state Department of Revenue oversees the appraisal and assessment of property throughout the state to ensure that properties are evaluated in a uniform manner. The state’s average property tax collections are relatively low, with an average effective rate (property taxes as a percentage of home value) of 0.74%. This is the 31st-lowest rate in the U.S.
If you’re considering purchasing a house in the Big Sky State, or if you’re already a Montana resident and want to refinance your mortgage, check out our Montana mortgage guide. It breaks down the rates and other information you’ll need to know before getting a mortgage.
Montana Gas Tax
Big Sky Country is a great place for a road trip, but keep in mind the state’s gas taxes when planning your route. The tax on regular gasoline is 32.5 cents per gallon. This is the ninth highest rate in the U.S. The tax on diesel is slightly lower: It‘s 29.55 cents per gallon.
Montana Estate Tax
As of January 1, 2005, there is no estate tax in Montana. Prior to that date, the estate tax was equal to the maximum credit allowed against the federal estate tax.
- More than 4 million people visit Yellowstone National Park every year. Approximately 80% of these visitors come in the months of June, July, August and September.
- Montana’s state motto is “Oro y Plata” which means “Gold and Silver” in Spanish.
- The largest cities in Montana include Billings, Missoula, Great Falls, Bozeman and Butte.