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Official Tax Guide

Montana Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Montana state taxes. Income tax (4.7% - 5.9%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: Montana

Welcome to Montana! As you prepare for your move to Big Sky Country, understanding the state's tax landscape is crucial for financial planning. Montana offers a unique tax structure with no general sales tax, but a progressive income tax system. This guide provides a clear overview of what to expect in 2025.

1. Income Tax

Montana utilizes a progressive income tax system, meaning tax rates increase as income rises. It is not a flat tax.

  • Tax Rates (2025): The rates range from 4.7% to 5.9%. The specific rate you pay depends on your filing status and taxable income bracket.
  • Brackets: The state has several brackets. While the exact income thresholds can adjust, the marginal rates remain consistent. For example, lower-income earners will pay a lower percentage on their income, while higher-income earners will pay the maximum rate on income exceeding the top threshold.
  • Federal Adjustments: Montana taxable income is based on your federal adjusted gross income (AGI), with specific state-level deductions and exemptions applied.

2. Sales Tax

This is one of Montana's most attractive features for new residents.

  • State Sales Tax: 0%. Montana does not impose a statewide sales or use tax on the sale of goods and services.
  • Local Taxes: Generally, local jurisdictions (cities, counties) do not levy additional sales taxes. However, there are limited exceptions for specific resort areas or special districts (e.g., on rentals or Prepared Food & Beverage). For most everyday purchases, you will not pay sales tax.

3. Property Tax

Property taxes in Montana are administered locally and are a primary source of revenue for schools, counties, and municipalities.

  • Tax Basis: Property taxes are based on the assessed value of your property. The tax rate is applied to this value to determine your annual bill.
  • Rate Context: While rates vary by county and municipality, Montana's effective property tax rate generally falls within or slightly below the national average. Homeowners can expect to pay a percentage of their property's value annually, similar to many other states.
  • Exemptions: Montana offers property tax reductions for certain groups, including qualifying seniors, disabled veterans, and surviving spouses. These often require a separate application with your local county assessor.

4. Other Taxes

Beyond income and property, Montana levies several other taxes you should be aware of:

  • Gas Tax: Montana imposes a state excise tax on gasoline and diesel fuel. As of 2025, the rate is approximately $0.32 per gallon for gasoline and $0.29 per gallon for diesel, though this can be subject to legislative change.
  • "Sin" Taxes: The state applies special excise taxes to specific goods:
    • Alcohol: Taxes are applied per gallon, varying by type (beer, wine, spirits).
    • Tobacco & Vaping: There is a state excise tax on cigarettes, other tobacco products, and e-liquids.
  • Inheritance/Estate Tax: Montana does not have a state-level inheritance or estate tax. However, federal estate tax laws still apply, and inherited assets may be subject to federal capital gains tax if sold.

5. Retiree Taxes

Montana is moderately tax-friendly for retirees, but the specifics depend on the source of income.

  • Retirement Income: Social Security benefits are fully exempt from Montana state income tax for most retirees. However, other retirement income—such as distributions from 401(k)s, IRAs, and pensions—is taxable at standard income tax rates.
  • Property Tax Relief: As mentioned, Montana offers property tax credits or reductions for seniors meeting specific age and income criteria.

6. Comparison to Neighbors

Montana's tax structure is distinct from its surrounding states:

  • Idaho: Has a progressive income tax (1-5.8% in 2025) but a 6% state sales tax (plus local additions). Montana is generally more favorable for sales tax but similar for income tax.
  • Wyoming: Has no state income tax and no state sales tax. Wyoming is more tax-advantaged for income and sales, though property tax rates are comparable.
  • North Dakota & South Dakota: Both have no state income tax on wages (ND taxes some investment income). Both have state sales taxes (ND ~5%, SD ~4.2%). Montana's lack of sales tax makes it unique in this region.
  • Washington: Has no state income tax but a significant state sales tax (~6.5%). Montana is the inverse, taxing income but not sales.

Disclaimer: Tax laws change frequently and can vary based on individual circumstances. This guide provides a general overview for 2025 and is not a substitute for professional tax advice. Please consult a Certified Public Accountant (CPA) or tax professional for guidance specific to your situation.