Montana uses a two-bracket income tax for TY2026 - 4.70% on income below the threshold and 5.65% above it - enacted by HB 337 (2023), which also schedules a reduction to 5.4% for the top rate in TY2027. Montana has no general sales tax, one of only five such states. Montana uses its own standard deduction ($5,540 single / $11,080 MFJ) plus a personal exemption of $3,000 per person. Montana computes state tax starting from federal taxable income, meaning OBBBA tips, overtime, and senior deductions reduce Montana tax automatically through structural flowthrough. No local income taxes apply.
State Income Tax
4.70% / 5.65% (2 brackets)
Standard Deduction (Single)
$5,540
Personal Exemption
$3,000 / person
Sales Tax
None (0%)
OBBBA Tips / OT / Senior
Flows through (structural)
Montana Income Tax Brackets 2026
Montana's two-bracket structure applies different thresholds by filing status. For TY2026 (HB 337, 2023 Montana Legislature):
Filing Status
Lower Bracket (0 – threshold)
Upper Bracket (above threshold)
Single / MFS
4.70% on first $21,600
5.65% above $21,600
Married Filing Jointly
4.70% on first $43,200
5.65% above $43,200
Head of Household
4.70% on first $32,400
5.65% above $32,400
HB 337 also schedules the top rate to drop from 5.65% to 5.40% beginning TY2027. Montana taxable income is computed starting from federal taxable income, with Montana-specific adjustments (including the Montana standard deduction and personal exemption in place of or in addition to federal adjustments).
Montana Standard Deduction 2026
Montana uses its own standard deduction, not the federal amount. For TY2026, Montana standard deduction amounts are:
Filing Status
Montana Standard Deduction
Single
$5,540
Married Filing Jointly
$11,080
Married Filing Separately
$5,540
Head of Household
$8,310
These amounts are confirmed by Montana DOR for TY2026. Montana's standard deduction is substantially lower than the federal standard deduction. Montana filers do not claim the federal standard deduction on their Montana return; they use Montana's own amounts or itemize using Montana's itemized deduction rules.
Montana Personal Exemption 2026
Montana allows a personal exemption of $3,000 per person for TY2026. Single filers and heads of household claim $3,000; married filing jointly filers claim $6,000 total ($3,000 per spouse). This exemption reduces Montana taxable income in addition to the standard deduction. Montana has retained personal exemptions, unlike the federal tax code which eliminated them in 2018.
Montana OBBBA Conformity - Structural Flowthrough
Montana is a confirmed structural flowthrough state for OBBBA purposes. Montana computes state income tax starting from federal taxable income as its base - before applying Montana's own rates and adjustments. This means the OBBBA federal deductions (qualified tip income, overtime compensation, and senior bonus income) reduce federal taxable income first, and that reduced figure then becomes Montana's starting point. Montana DOR has session-confirmed this structural conformity (Sweep B, 2026-07-23).
In practical terms: a Montana worker with $10,000 in qualified overtime compensation saves roughly $565 in Montana income tax (at the 5.65% upper rate) through this automatic flowthrough - with no separate Montana deduction form required.
Montana Has No General Sales Tax
Montana is one of only five states (with Alaska, Delaware, New Hampshire, and Oregon) that levies no general state sales tax. Montana residents pay no sales tax on most goods and services purchased in the state. This effectively makes Montana's consumer tax burden among the lowest in the nation on retail purchases. The sole exception is a 3% resort tax levied by certain designated tourist communities (Big Sky, West Yellowstone, and others), which applies to lodging, restaurant meals, and select goods within those specific areas only.
Montana uses a simple two-bracket income tax for TY2026, established by HB 337 (2023 Montana Legislature). The rates are 4.70% on income up to the bracket threshold and 5.65% on income above it. For single filers, the threshold is $21,600; for married filing jointly, $43,200; for head of household, $32,400. HB 337 further schedules a reduction to 5.4% for the top rate beginning TY2027, making Montana's already-simple structure even lower over time.
Does Montana conform to the OBBBA tips, overtime, and senior deductions?
Yes - Montana conforms structurally to all three OBBBA deductions. Montana computes state income tax starting from federal taxable income as its base. This structural flowthrough means that any deduction that reduces federal taxable income - including the OBBBA qualified tip deduction, the overtime deduction, and the senior bonus deduction - automatically reduces the income base to which Montana applies its 4.7% / 5.65% rates. No separate Montana legislative action is required. This "structural incorporation" was session-confirmed (Sweep B, 2026-07-23) by the Montana Department of Revenue.
What is Montana's standard deduction for 2026?
Montana uses its own standard deduction amounts, not the federal standard deduction. For TY2026, the Montana standard deduction is $5,540 for single filers, $11,080 for married filing jointly, $5,540 for married filing separately, and $8,310 for head of household. These are significantly lower than the federal standard deduction amounts. Montana filers who itemize on their federal return may still choose the Montana standard deduction on their state return, as the two are computed independently.
Does Montana have a sales tax?
No. Montana has no general state sales tax. It is one of only five states with no sales tax (along with Alaska, Delaware, New Hampshire, and Oregon). Montana residents pay no sales tax at the point of purchase on most goods and services. Note: certain resort communities such as Big Sky and West Yellowstone levy a local 3% resort tax on lodging, restaurants, and select goods, but this applies only in designated tourist areas - it is not a statewide sales tax.
Does Montana have a personal exemption?
Yes. Montana provides a personal exemption of $3,000 per person for TY2026. Single and head-of-household filers claim $3,000; married filing jointly filers claim $6,000 ($3,000 per spouse). This personal exemption is separate from and in addition to the Montana standard deduction. Together, the standard deduction and personal exemption reduce the Montana taxable income base before the 4.7% / 5.65% brackets apply.
When will Montana's top income tax rate drop further?
HB 337, enacted by the 2023 Montana Legislature, scheduled a further reduction in Montana's top income tax rate from 5.65% (TY2026) to 5.40% beginning with TY2027. The lower bracket rate of 4.70% is not scheduled to change under current enacted law. This means Montana residents in the upper bracket will see an additional savings beginning in TY2027, without any new legislative action required. The TY2027 schedule is contingent on HB 337 remaining in effect.
Are capital gains taxed in Montana?
Montana taxes capital gains as ordinary income at the same 4.70% / 5.65% rates that apply to wages and other income. However, Montana provides a capital gains tax credit that reduces the effective state rate on long-term capital gains below the headline rate. The credit partially offsets the Montana income tax on qualifying long-term gains. Verify the exact credit calculation and eligible gain types with Montana DOR for TY2026.
We use cookies for analytics (Google Analytics 4) and advertising (Google AdSense). Your calculator inputs never leave your browser.Learn more
