Montana enacted individual income tax cuts in 2021, reducing the top marginal rate from 6.9 percent to 6.75 percent in 2022 and scheduling further reductions, bracket consolidation, and structural reforms for 2024. Initially, the 2021 law compressed the state’s seven individual income tax brackets into two, with rates of 4.7 and 6.5 percent, to be effective in 2024. However, in 2022, lawmakers further reduced the top marginal rate to 5.9 percent effective 2024. While the bottom bracket features an increased rate, conforming to the federal standard deduction in 2025 will help lower-income taxpayers. The individual income tax reforms also removed the marriage penalty by doubling the bracket widths for married filers. The top marginal rate will be reduced to 5.65 percent in 2026 and 5.4 percent in 2027. Additionally, the number of Montanans eligible for the lower bracket has expanded.
Montana’s corporate taxpayers are subject to a single rate of 6.75 percent. Montana does not conform to federal net operating loss deductions and allows carryforwards for 10 years and carrybacks for 3. Montana is also among the minority of states that taxes net CFC-tested income (NCTI), which replaced global intangible low-taxed income (GILTI), with a 20 percent inclusion. The state applies a different formula to assess distinct property types, known as split roll taxation. This leads to higher property tax costs for businesses and for renters, since rental properties with four or more units are classified as commercial property. Montana has a generous de minimis exemption for tangible personal property, eliminating compliance costs for many smaller and mid-sized businesses.
Montana property owners have faced surging property valuations in recent years. In 2025, Montana lawmakers enacted changes to the property tax code. Property owners now face a tiered tax structure with different rates applying depending on the value of the property, effectively shifting the tax burden to other classes of property. Residential property owners are also eligible for a one-time property tax rebate and are automatically eligible for the future homestead exemption.
| Category | Rank | Rank Change | Score |
|---|---|---|---|
| Overall | 6 | -1 | 6.19 |
| Corporate Taxes | 24 | -5 | 5.38 |
| Individual Income Taxes | 12 | -2 | 5.92 |
| Sales Taxes | 3 | 0 | 8.58 |
| Property Taxes | 17 | 3 | 5.32 |
| Unemployment Insurance Taxes | 25 | -5 | 5.12 |
Get facts about taxes in your state and around the US
Tax collections vary widely by state, making per capita collections figures—a measure of collections per person—especially useful, as they allow comparisons across differences in tax rates and bases, economic capacities, and policy decisions that impact the size and scope of government.
5 min read
Rental cars are some of the most heavily taxed transactions in the US. Rather than levying additional taxes on rental cars by trying to export the tax burden to nonresidents, municipalities should enact principled, neutral transportation tax policy that is unlikely to discourage visitors, tourists, and other economic activity.
5 min read
Millions of Americans, along with significant amounts of income and economic activity, are moving from high-tax states to those with more competitive tax systems and lower overall costs of living.
8 min read