What is the Montana state income tax rate in 2026?
Montana taxes income in 2 brackets from 4.70% to 5.65% in 2026; the top rate starts at $47,500 of taxable income for a single filer and $95,000 for a married couple filing jointly. Example: a married couple, both 70, with $40,000 of Social Security, a $30,000 private pension and $30,000 of IRA withdrawals ($100,000 in all; the pension and IRA money split evenly between them) owes $1,653 of Montana income tax (1.7% of their income) and $5,087 of federal tax; a single 62-year-old with $24,000 of Social Security, an $18,000 pension and $18,000 of IRA withdrawals ($60,000 in all) owes $1,706 to Montana and $4,111 federal. The schedule, how Montana treats each kind of retirement income, and its local taxes follow.
| Rate | Single | Married filing jointly |
|---|---|---|
| 4.70% | $0 to $47,500 | $0 to $95,000 |
| 5.65% | over $47,500 | over $95,000 |
How Montana taxes retirement income in 2026
| Standard deduction or personal exemption | $16,100 single, $32,200 married filing jointly, $24,150 head of household. The standard deduction includes $2,050 more for a single or head-of-household filer 65 or older, and $1,650 more for each spouse 65 or older on a married return. (Montana Department of Revenue; rules) |
|---|---|
| Social Security | The federally taxable amount is taxed as it is, with no state threshold. (Montana Department of Revenue; rules) |
| Pensions, annuities and IRA/401(k) withdrawals | No exclusion: pension, annuity and IRA/401(k) distributions are taxed as ordinary income. (Montana Department of Revenue; rules) |
| Age 65 and older | At age 65 or older: $5,660 is subtracted from the base ($11,320 for a married couple filing jointly when both qualify), against any income. The federal senior deduction is also taken against the state base: $6,000 for each taxpayer 65 or older, each reduced by 6% of income above $75,000 (single and head of household) or $150,000 (MFJ). (Montana Department of Revenue; rules) |
| Capital gains | Net long-term gain is taxed as ordinary income. Gains are taxed on their own schedule, stacked on top of ordinary income: 3% up to the first ordinary bracket threshold, 4.1% above it. Short-term gains are ordinary income. (Montana Legislature; rules) |
Local income taxes: none in Montana. The local income taxes the tax engine computes for 2026 are in Delaware, Indiana, Iowa, Kentucky, Maryland, Michigan, Missouri, New York, Ohio, Oregon and Pennsylvania.
Your whole 2026 return in Montana, federal and state together, ends in a refund or an amount owed: 2026 tax return calculator (free) → What five typical retiree households owe or get back in Montana and every other state: the 2026 tax return study.
Figures for 2026 from QuantCalc’s open tax engine (federal 2.3.2, state 1.14.2), for a full-year resident. An estimate, not tax advice: credits, itemized deductions and rules this page does not ask about change a real return. Every Montana rule with its official sources: Montana rules and sources.
In our 510,000-path Monte Carlo study of 30-year retirement outcomes, Montana retirees finished at 73.53% success rate (ranked #30 of 51 by success rate, #35 of 51 by lowest median lifetime state tax). Median 30-year state-tax cost: $71,190 — that is $71,190 more than a Wyoming retiree pays. Median terminal balance after 30 years: $859,237. State tax is part of the optimization here — the playbook below shows the federal-state-ACA stack.
The MT verdict
For a retiree planning withdrawals in 2026, Montana is a middle-of-the-road state for retirement taxation. Still taxes social security in full, at every income level.
Montana has no dollar-capped retirement-income exclusion, so every converted dollar enters the state tax base. The marginal cost of a conversion here is the federal bracket plus the state rate plus, below 65, whatever premium tax credit crossing the 400% FPL cliff would cost you.
Worked example: $30k Roth conversion in Montana
Consider a married couple age 58 in Montana with $75,000 of ordinary income (their MAGI), both on ACA Marketplace coverage. They want to convert $30,000 from a traditional IRA to a Roth. The Montana state tax on that conversion is approximately $1,695 — the full amount is taxed at 5.65%. Federal income tax adds another $3,600 — the whole conversion is taxed in the federal 12% bracket. And because the conversion pushes their MAGI to $105,000 — over the 400% FPL cliff of $84,600 — they lose their full ACA premium tax credit, $25,642 a year at Montana's average benchmark Silver premium. Total cost of the $30,000 conversion: about $30,937, or an effective 103.1% marginal rate. That state figure uses Montana's top bracket rate, so read it as a ceiling: a household whose income lands in a lower bracket pays less, and Montana's own deductions reduce it further. The federal-state-ACA stack matters in Montana.
Cost breakdown
| Component | Amount |
|---|---|
| Federal income tax (12% bracket) | $3,600 |
| Montana state income tax | $1,695 |
| ACA premium tax credit clawback | $25,642 |
| Total cost on $30,000 conversion | $30,937 (103.1% effective) |
Scenario B (moderate): cliff-aware $34.6k conversion in Montana
A Montana couple aged 60, both on Marketplace coverage with $50K wages converts $34,600, which lifts their MAGI to exactly the $84,600 400% FPL cliff: still eligible, and they keep a premium tax credit of $26,843 a year. One more dollar of conversion would cost all of it. State tax: $1,955 — the full amount is taxed at 5.65%. Federal income tax added: $4,012 (the whole conversion is taxed in the federal 10%–12% brackets). ACA PTC preserved. Total cost: $5,967, or 17.2% effective. In moderate-tax states, the conversion size is bounded by both the IRMAA two-year lookback and the ACA cliff — not state tax alone.
What the Monte Carlo data says about Montana
QuantCalc Research ran a 30-year, 10,000-path Monte Carlo simulation for an identical representative retiree (age 60, $2M starting balance, 60/40 portfolio, $80K real annual spend) in each of the 51 U.S. jurisdictions. Here's how Montana compared to the best- and worst-case states:
| Metric | Montana | Wyoming (best) | California (worst) |
|---|---|---|---|
| 30-year success rate | 73.53% | 77.11% | 69.03% |
| Rank (of 51) | #30 | #1 | #51 |
| Median lifetime state tax (30y) | $71,190 | $0 | $154,980 |
| Median total tax (30y) | $289,590 | $218,400 | $373,380 |
| Median terminal balance | $859,237 | $999,751 | $695,612 |
| Δ success vs Wyoming | -3.58 pp | — | −8.08 pp |
Sources: QuantCalc 51-State Monte Carlo Study (2026-05-12) — 510,000 total paths, methodology fully documented and dataset released CC-BY-4.0. Montana's row in the dataset uses the same portfolio + spend + retirement age as every other state — the only variable is state tax treatment.
How Montana treats capital gains in retirement
Montana taxes long-term capital gains as ordinary income at the same top bracket rate (5.65%). That stacks on top of federal LTCG (0%/15%/20%) and the 3.8% NIIT for high earners. A 'free' federal 0% LTCG harvest still costs you up to 5.65% at the state level — meaningful in this jurisdiction, particularly during Roth-conversion years when your MAGI is already elevated.
Why the ACA cliff hits hard in Montana
The 400% federal-poverty-level cliff is federal, not state-specific — but its dollar impact depends on the benchmark Silver-plan premium in your county. Montana's Marketplace pricing and your household composition determine the size of the subsidy at risk. A couple aged 58 with MAGI of exactly $84,600 still has $24,686 a year of premium tax credit at Montana's average benchmark Silver premium, and all of it is on the line. With the 2021–2025 enhanced credit expired, $1 of additional MAGI above 400% FPL eliminates the entire credit.
For 2026 the 400% FPL threshold is:
- Household of 1: $62,600
- Household of 2: $84,600
- Household of 3: $106,600
- Household of 4: $128,600
Roth conversion strategy for Montana
The MT-specific playbook depends on tier:
- Identify your cliff distance. Compute MAGI from all income sources (wages, capital gains, interest, dividends, traditional withdrawals). Find your headroom under 400% FPL. Use the live cliff widget above for a quick check.
- Stay under the cliff if you can. In Montana at 5.65%, the marginal cost of going over the cliff is federal tax + state tax + full PTC clawback. The break-even conversion size is smaller than in tax-free states.
- If you must go over, convert big. Once you've crossed the cliff, additional conversion dollars only cost federal + state tax (no incremental PTC loss). A "rip the bandage" conversion year can be efficient if you have many traditional dollars to move.
- Coordinate with capital gains and the 0% LTCG bracket. Montana taxes long-term capital gains as ordinary income at the same top bracket rate (5.65%). That stacks on top of federal LTCG (0%/15%/20%) and the 3.8% NIIT for high earners. A 'free' federal 0% LTCG harvest still costs you up to 5.65% at the state level — meaningful in this jurisdiction, particularly during Roth-conversion years when your MAGI is already elevated.
- Plan ahead for IRMAA. The IRMAA Medicare premium surcharge has a 2-year lookback. A Montana resident in their early 60s converting today will see IRMAA implications at 65. See RMD + IRMAA calculator for the lookback math.
State tax basics for Montana retirees
| Question | Montana |
|---|---|
| State income tax | 5.65% top marginal |
| Number of brackets | 2 |
| Social Security taxed | Yes |
| 401(k) / Traditional IRA taxed | Yes |
| Retirement-income exclusion (couple) | None |
| Roth conversion draws that exclusion | Not applicable |
| State estate / inheritance tax | No |
| Retirement-friendliness tier | moderate |
| Notable feature | still taxes Social Security in full, at every income level |
| 30-yr MC success rate (rank) | 73.53% (#30/51) |
| Median 30-yr state tax | $71,190 |
Model your full Montana retirement scenario
Free Monte Carlo (100 paths per run; 10,000 with PRO) with state-specific tax engine, ACA cliff, Roth conversion optimizer, IRMAA lookback — free, no signup.
Run a free simulation →What a year-end move does to your Montana and federal tax in 2026
Each move changes three bills at once: the federal return, the Montana return and, for anyone on Medicare, the IRMAA surcharge the 2026 income sets for 2028. Example: a married couple, both 72, with a $40,000 pension, $50,000 of Social Security, a $30,000 IRA withdrawal and $10,000 of long-term gains already realized in 2026, the pension, the IRA money and the conversion split evenly between them on the state return. Each row is that year with one move made, against the same year without it (negative = less tax).
| Move (by December 31, 2026) | Federal tax | Montana tax | IRMAA in 2028 |
|---|---|---|---|
| Convert $25,000 to a Roth IRA | $3,165 | $1,175 | $0 |
| Send $10,000 of the IRA withdrawal to charity as a QCD | −$1,200 | −$470 | $0 |
| Harvest a $5,000 loss against the year's gains | $0 | −$150 | $0 |
An estimate from QuantCalc’s open tax engine (federal 2.3.2, state 1.14.2) for the 2026 tax year. Not tax advice: your return depends on facts this page does not ask about, so check a move with your tax preparer or custodian before acting. IRMAA uses the 2026 tiers for two people on Medicare; the 2028 tiers are not published yet. How the engine computes each line, with its official source: federal, Montana.
Related calculators and reading
- All-states retirement tax comparison — see Montana alongside the other 50 jurisdictions.
- State Retirement Tax Data 2026 — the per-jurisdiction rate, exclusion and Social Security figures behind this page, as CSV and JSON.
- ACA Subsidy Cliff Optimizer — find the largest Roth conversion that keeps you under 400% FPL.
- Roth Conversion Optimizer — bracket-fill vs. fixed-amount strategy comparison.
- RMD + IRMAA Calculator — Medicare premium surcharge based on 2-year-old MAGI.
- Safe Withdrawal Rate Calculator — sequence-of-returns-aware withdrawal planning.
- Research: 51-State 30-year Monte Carlo (2026) — full ranking and dataset.
- Research: Monte Carlo ACA Cliff 2026 — 80,000-path study of the cliff cost.
FAQ
What is the Montana state income tax rate in 2026?
Montana taxes income in 2 brackets from 4.70% to 5.65% in 2026; the top rate starts at $47,500 of taxable income for a single filer and $95,000 for a married couple filing jointly. The full schedule and Montana's deductions are on this page (Montana Legislature; rules).
How much state income tax does a retiree pay in Montana?
It depends on the kind of income. In 2026, a married couple, both 70, with $40,000 of Social Security, a $30,000 private pension and $30,000 of IRA withdrawals ($100,000 in all; the pension and IRA money split evenly between them) owes $1,653 of Montana tax, and a single 62-year-old with $24,000 of Social Security, an $18,000 pension and $18,000 of IRA withdrawals ($60,000 in all) owes $1,706. Federal tax comes on top: $5,087 and $4,111.
Does Montana tax Social Security benefits?
In some cases. The federally taxable amount is taxed as it is, with no state threshold. (Montana Department of Revenue; rules)
Does Montana tax pensions, 401(k) and IRA withdrawals?
No exclusion: pension, annuity and IRA/401(k) distributions are taxed as ordinary income. (Montana Department of Revenue; rules)
Does Montana have local income taxes?
No. No county, city or school district in Montana levies an income tax that the tax engine computes for 2026.
Does Montana tax Roth conversions?
Montana taxes Roth conversions as ordinary income at the state level. A $30,000 conversion by a couple aged 58 costs about $1,695 in state tax alone — the full amount is taxed at 5.65% — on top of federal tax and any ACA subsidy clawback. That state figure uses Montana's top bracket rate, so read it as a ceiling: a household whose income lands in a lower bracket pays less, and Montana's own deductions reduce it further.
What is Montana's 30-year Monte Carlo retirement success rate?
In QuantCalc's 510,000-path Monte Carlo study, a representative retiree in Montana (age 60, $2M balance, 60/40 portfolio, $80K real spend) finished 30 years at 73.53% success rate — ranked #30 of 51 jurisdictions. Median 30-year state tax: $71,190. Median terminal balance: $859,237.
What is the ACA cliff in Montana for 2026?
The ACA premium-tax-credit cliff is a federal threshold, not state-specific. For a household of two in 2026, it sits at 400% of the federal poverty level — $84,600. Crossing it by even $1 of MAGI eliminates the full subsidy now that the 2021-2025 enhanced credit has expired.
Is Montana a good state to retire for tax purposes?
Montana is a middle-of-the-road state for retirement taxation. Still taxes social security in full, at every income level. In our Monte Carlo ranking it placed #30 of 51 jurisdictions.
Does Montana have a state estate or inheritance tax?
No — Montana does not impose a state-level estate or inheritance tax.
How does Montana tax capital gains?
Montana taxes long-term capital gains as ordinary income at the same top bracket rate (5.65%). That stacks on top of federal LTCG (0%/15%/20%) and the 3.8% NIIT for high earners. A 'free' federal 0% LTCG harvest still costs you up to 5.65% at the state level — meaningful in this jurisdiction, particularly during Roth-conversion years when your MAGI is already elevated.
Last updated 2026-10-02. State income tax figures reflect the 2026 schedule published by Montana's tax authority. ACA poverty-level figures: the 2025 HHS poverty guidelines for the 48 contiguous states and DC ($15,650 for one person, plus $5,500 for each additional person; 90 FR 5917), which set 2026 Marketplace coverage. Premium tax credit estimates use Montana's average benchmark Silver premium. Monte Carlo numbers from the QuantCalc 51-state research drop (2026-05-12, CC-BY-4.0). This page is educational. Not tax, legal, or financial advice — consult a qualified advisor.