What is Montana Income Tax? Rates & Tax Brackets

Updated for tax year 2025.

If you live in Montana, or if you’re a part-year resident or nonresident with Montana-source income, you may need to file a Montana state income tax return along with your federal return. Montana uses a two-bracket system for ordinary income, so the rate you pay depends on your filing status and taxable income.

This guide explains Montana’s 2025 income tax rates and brackets, standard deduction, available subtractions and credits, and the updates for the current tax year. When you’re ready to file, TaxAct® automatically applies Montana’s tax rules to help you accurately prepare your Montana return alongside your federal return.

What is the Montana state income tax?

Montana state income tax is a tax on income earned by individuals. It is collected by the Montana Department of Revenue and helps fund state services.

Montana taxes individual income using a simplified system that generally starts with federal taxable income. For tax year 2025, Montana applies two ordinary income tax rates (4.7% and 5.9%) based on your filing status. Montana also taxes net long-term capital gains at separate, lower rates.

Montana income tax rates and tax brackets

Montana’s income tax brackets apply to ordinary income for 2025. Ordinary income is taxable income that is not net long-term capital gain income.

Married Filing Jointly and Surviving Spouse	Head of Household	Single or Married Filing Separately	Tax Rate
Up to $42,200	Up to $31,700	Up to $21,100	4.7%
Over $42,200	Over $31,700	Over $21,100	5.9%

Montana also taxes net long-term capital gains at lower rates of 3% and 4.1%, depending on your filing status and how much ordinary income you have. View Montana’s 2025 tax tables.

If you need more information on how federal tax brackets work, you can use our tax bracket calculator for federal taxes.

Montana standard deduction

Montana does not have a separate state standard deduction for tax year 2025. Instead, you generally use the same standard deduction or itemized deductions you claimed on your federal return. Montana also includes certain additional federal deductions when calculating Montana taxable income.

If you itemize deductions federally, you may need to add back the portion of any state income tax deduction that reduced your federal taxable income. You cannot choose a different deduction method for your Montana return than the one you used federally.

Montana exemptions, deductions, and credits

Montana no longer has dependent or personal exemptions. However, Montana offers several subtractions and credits that may reduce what you owe. Common items include:

Subtraction for taxpayers age 65 and older — a subtraction of $5,660 from federal taxable income ($11,320 if married filing jointly and both spouses are 65 or older). These amounts are adjusted annually for inflation.
Montana Earned Income Tax Credit — a refundable credit equal to 10% of your federal earned income tax credit. Part-year residents and certain other taxpayers may qualify for a reduced credit based on their Montana earned income, but nonresidents do not qualify.
Working Military Retirement Exemption — certain military retirees may subtract some retirement benefits from Montana taxable income if they meet residency and eligibility requirements.
Montana 529 plan subtraction — subtract contributions to a Montana 529 plan up to $4,500 per taxpayer ($9,000 if married filing jointly) for tax year 2025. These limits will adjust annually for inflation.
Credit for income tax paid to another state or country — full-year and part-year Montana residents may be able to claim a credit on Schedule III for tax paid to another state or country on income that is also taxable by Montana.
Elderly Homeowner/Renter Credit — a refundable credit for eligible Montana residents age 62 or older, with a benefit up to $1,150.

For a full list of Montana income tax subtractions, additions, and credits, see the Montana Department of Revenue.

Montana tax changes for 2025

Montana’s income tax system underwent many changes recently. Read more about what changed at the Montana Tax Simplification Resource Hub.

The subtraction for taxpayers age 65 and older increased from $5,500 to $5,660 for single filers and from $11,000 to $11,320 for married filing jointly when both spouses are 65 or older.
The maximum subtraction for contributions to a Montana 529 plan increased from $3,000 to $4,500 per taxpayer ($9,000 for married filing jointly).
Senate Bill 53 clarified joint 529 and 529A plan contributions, updated qualified 529 rollover rules, and reduced the mineral royalty withholding rate.
Form 2 was updated to reflect federal Working Families Tax Cut Act (One Big Beautiful Bill or OBBB) changes, including updates to the standard and itemized deduction amounts and the additional deductions reported on federal Schedule 1-A.

Montana also introduced some significant property tax reforms for tax year 2025. Read more about 2025 tax information for Montana property owners.

FAQs

Does Montana have a state income tax?

Yes, Montana has a state income tax.

What is the Montana income tax rate?

Montana uses a two-bracket system for ordinary income for tax year 2025, with rates of 4.7% and 5.9% depending on your filing status and taxable income.

What are the Montana income tax brackets for 2025?

Montana’s 2025 ordinary income tax rates are 4.7% on income up to $21,100 for single filers and those married filing separately ($31,700 for head of household; $42,200 for married filing jointly), and 5.9% on income above those thresholds. Montana also taxes net long-term capital gains at lower rates of 3% and 4.1%. See the Montana income tax brackets table above.

How does Montana state income tax work?

Montana state income tax generally starts with your federal taxable income on Form 2. You then apply Montana additions and subtractions on Schedule I to arrive at Montana taxable income. Montana applies its two-bracket ordinary income rates (and separate long-term capital gains rates) to that amount. Credits such as the Montana Earned Income Tax Credit may further reduce your tax or increase your refund.

Do I have to file a Montana state tax return?

You may need to file a Montana state tax return if you are a Montana resident, part-year resident, or nonresident with Montana-source income and you had a federal filing requirement (or Montana additions or subtractions). If you qualify for the federal earned income tax credit, you must file a Montana return to claim the Montana EITC. Check Montana Department of Revenue guidance for your situation.

What is the Montana standard deduction for 2025?

Montana does not have a separate state standard deduction. Instead, you generally use the same standard deduction or itemized deductions you claimed on your federal return. If you itemize federally, you may need to add back the portion of any state income tax deduction that reduced your federal taxable income.

How much is Montana state income tax?

There isn’t one Montana state income tax amount that applies to everyone. How much Montana state income tax you owe depends on your Montana taxable income, filing status, whether you have net long-term capital gains, Montana subtractions and credits, and other factors. Use the Montana income tax brackets above as a starting point.

Why is my Montana tax return different from my federal return?

Montana generally uses federal taxable income as a starting point and follows many recent federal tax law changes, including provisions of the Working Families Tax Cut Act (One Big Beautiful Bill or OBBB). However, Montana also has its own tax adjustments. For example, Schedule I includes adjustments for items such as 529 plan contributions and certain state income tax deductions, while taxpayers age 65 and older may qualify for a separate subtraction on Form 2. Montana also taxes net long-term capital gains at separate rates. These differences can cause your Montana taxable income, tax, or credits to differ from your federal return.

The good news is that our tax software automatically applies Montana’s current tax rules when preparing your state return, so you don’t have to calculate these differences yourself.

For more information on Montana tax law, visit the Montana Department of Revenue. If you’d like to learn more about recent federal tax law changes, see our OBBB tax changes guide.

The bottom line

Montana has two ordinary income tax rates for 2025, along with separate rates for net long-term capital gains. Montana taxable income generally starts with federal taxable income and includes certain Montana-specific adjustments. Depending on your situation, subtractions and credits such as the Montana EITC may help lower your tax bill.

When you’re ready to file, TaxAct can help you prepare your federal and Montana returns in one place so you can file with confidence.

Already filed your taxes and waiting for your refund? Learn more about where your Montana state tax refund is.

This article is for informational purposes only and not legal or financial advice.

All TaxAct offers, products and services are subject to applicable terms and conditions.

The OBBB is now also being referred to by lawmakers as the Working Families Tax Cut Act. You may see one or both names used here, but they refer to the same set of tax changes.

Citations

Montana Department of Revenue. “2025 Montana Tax Tables and Deductions.” Accessed 21 Aug. 2026.
Montana Department of Revenue. “Montana Tax Simplification Resource Hub.” Accessed 21 Aug. 2026.
Montana Department of Revenue. “2025 Montana Form 2 Individual Income Tax Instructions.” Accessed 21 Aug. 2026.
Internal Revenue Service. “2025 Instructions for Form 1040.” Accessed 21 Aug. 2026.
TaxAct. “Working Families Tax Cuts Act: 2025 Tax Reform Explained.” TaxAct Blog.
TaxAct. “Where’s My Montana State Tax Refund?” TaxAct Blog.

What is Delaware Income Tax? Rates & Tax Brackets »

« What is Maine Income Tax? Rates & Tax Brackets

Tags: Filing StatusState TaxesTax DeductionsTax RefundUpdated for tax year 2025

Meghen Ponder: Meghen Ponder is an editorial writer for TaxAct who specializes in writing content about finance and taxes. She enjoys decoding the intricacies of the tax world and helping others answer their tax questions.