The local and state tax burden in Montana, when accounting for state and local taxes, totals 8.7%, which is significantly below the national average of 9.8%. Like other states, there are excise taxes of liquor, beer and cigarettes, as well as vehicle taxes. There are also property taxes that must be given consideration. Tax returns are due on April 15.
Montana state sales tax – There is no state sales tax in Montana.
Montana personal income tax
There are seven income tax brackets:
- 1% on the first $2,600 of taxable income.
- 2% between $2,601 and $4,600.
- 3% between $4,601 and $6,900.
- 4% between $6,901 and $9,400.
- 5% between $9,401 and $12,100.
- 6% between $12,101 and $15,600.
- 6.9% between $15,601 and above.
Most Montana residents will pay the top 6.9% state tax rate.
Montana excise taxes
Taxes will be assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.
- $1.70 per package of 20 cigarettes
- $8.62/gallon on spirits
- $1.06 per gallon on table wine
- $.14 per gallon of beer
- $.278/gallon on gasoline
There is a 4% tax on rental vehicles that incorporates taxes on campgrounds and accommodations. This is to provide infrastructure in tourist areas without relying solely on property taxes. Montana excise taxes are comparatively high due to an absence of state sales taxes.
Montana inheritance tax
Only federal laws are in effect. Estate laws have not been enforceable since the federal government eliminated state credits in 2005. The Montana inheritance tax was repealed in the year 2000.
Montana payroll taxes
State Disability Insurance – none
State Unemployment Insurance – 1% to 6.30%, wage base is $27,000 for 2012.
Contribution rates by employer:
- Government ranges from 0.06% to 1.5%
- Agricultural, forestry, and fishing employers use 2.68%
- Mining employers use 2.28%
- Construction employers use 3.18%
- Manufacturing employers use 2.08%
- Transportation, communications, and public utilities employers use 1.98%
- Wholesale trade employers use 1.78%
- Retail trade employers use 1.78%
- Finance, insurance, and real estate employers use 1.68%
- Services employers use 1.98%
All other employers contribute 3.18%
State minimum wage is 7.35/hr
Montana state property tax
Property tax is assessed on equipment, vehicles and livestock. The amount of taxation is determined by the property value times the tax rate set by the legislature.
Montana state corporate tax
There is a flat tax of 6.25% on all corporate income.
There are personal exemptions from taxation that range from $1,780 - $4,010 for individuals and $3,560 - $8,020 for couples. Dependents are subject to a $2,140 exemption. Those 65 and older receive a $2,040 exemption. You may make full deductions for federal taxes paid.
Those single as well as 65 and older can deduct $1,600 in interest income from taxation. Married persons over 65 can deduct $800. Social security benefits may be taxable, depending on state law. Railroad retirement benefits are 100% exemptible. There are reductions and exemptions on property taxes for the elderly and disabled veterans.
There is an income tax credit for child and dependent care expenses.