Montana Tax Guide 2026: 5.65% Top Income Tax Rate, No Sales Tax, Capital Gains Rates

Montana’s income tax was reformed in stages: the top marginal rate fell from 6.75% to 5.9% for 2024 (Senate Bill 399 of 2021 and Senate Bill 121 of 2023), and House Bill 337 (2025) cut it again to 5.65% for 2026 while raising the 4.7% bracket to $47,500 for single filers. Combined with Montana’s existing advantages — no sales tax, lower long-term capital gains rates, and no estate tax — the structure makes Montana increasingly attractive for high-income individuals considering relocation from higher-tax western states.

Montana occupies a special position as one of only five states with no sales tax (alongside Alaska, Delaware, New Hampshire, and Oregon). This means Montanans pay no state sales tax on retail goods, groceries, clothing, or most services — a meaningful saving for families and individuals with significant consumer spending. The state’s growing popularity with California transplants, remote workers, and outdoor enthusiasts has driven substantial real estate appreciation, particularly in Bozeman and the Flathead Valley, which now rival some Colorado resort communities in price.

Montana’s 2024 Flat Tax Reform: What Changed and Why It Matters

Montana’s income tax now has two brackets: for 2026, 4.7% on the first $47,500 of taxable income (single) and 5.65% above. The top rate was 6.75% in 2023; Senate Bill 399 (2021) and Senate Bill 121 (2023) cut it to 5.9% for 2024, and House Bill 337 (2025) lowered it to 5.65% for 2026 and 5.4% for 2027, while widening the brackets.

Montana Tax Rates by Year (single filer)

Joint filers and surviving spouses use double the single amounts in 2024–2026 ($95,000 in 2026) and heads of household use $71,250 in 2026. The widened 2026 brackets mean a single filer with $100,000 of gross income pays about $4,289 of Montana income tax after the $16,100 federal standard deduction.

Montana vs Neighboring States After Reform

Montana compares reasonably well to neighboring states, particularly given the no-sales-tax advantage. The combination of 5.65% top income tax rate with no sales tax may actually result in a lower total consumption-adjusted tax burden than Idaho (5.3% income + 6% sales tax) for high earners with significant consumer spending.

Montana Capital Gains: The 3.0% and 4.1% Rates

Montana’s capital gains treatment is more favorable than its ordinary income tax. Net long-term capital gains are taxed under a separate two-rate schedule: 3.0% on the first slice of gains and 4.1% above it. The 3.0% slice is the 4.7%-bracket amount for your filing status ($47,500 for single filers in 2026) less your other taxable income; once ordinary taxable income reaches that amount, all long-term gains are taxed at 4.1%.

Montana Capital Gains Rate Calculation

For a Montana resident with $100,000 of ordinary taxable income and $500,000 in long-term capital gains (2026, single):

• Ordinary taxable income is already above $47,500, so no gain qualifies for the 3.0% slice
• Montana tax on the gain: $500,000 × 4.1% = $20,500
• Effective Montana rate on the $500,000 gain: 4.1%

Montana Capital Gains vs Other States

For investors with significant capital gain events — selling a business, a large real estate transaction, or liquidating a concentrated stock position — Montana’s 4.1% top long-term rate is well below California’s top rate (13.3%) or Oregon’s (9.9%). At the top marginal rates, a California resident with $1 million in long-term gains who establishes genuine Montana domicile before selling would face 4.1% in Montana instead of up to 13.3% in California, a difference of up to about $92,000 in state tax.

Important: Domicile Requirement

Montana’s capital gains rates only benefit genuine Montana residents. Like California, high-tax states will audit residents who claim to have changed domicile specifically to realize capital gains in a lower-tax state. Montana domicile must be genuinely established before the triggering event, with a change of driver’s license, voter registration, primary home, and actual physical presence in Montana.

Montana Property Taxes, No Sales Tax Benefit, and the Full Tax Picture

Montana Property Tax System

Montana’s property tax system is somewhat complex — residential taxable value is set as a percentage of market value (a schedule that has changed in recent years), and local mill rates are then applied to that taxable value. The effective average rate of approximately 0.61% is below the national average.

Montana’s fastest-growing areas — Bozeman (Gallatin County) and the Flathead Valley — have experienced dramatic home price appreciation. Bozeman home prices have risen sharply in recent years, driven by an influx of remote workers and lifestyle migrants from California, Texas, and other high-cost states. At a 0.75% effective rate, a $700,000 Bozeman home carries approximately $5,250 in annual property taxes.

The No-Sales-Tax Advantage Quantified

Montana’s absence of a sales tax provides real, measurable savings compared to most states. For a family spending $80,000 per year on taxable goods and services:

• vs. California (average combined rate about 9.0%): Saves approximately $7,200/year
• vs. Idaho (6%): Saves approximately $4,800/year
• vs. Colorado (average combined rate about 7.9%): Saves approximately $6,300/year

This tax-free shopping benefit has long attracted cross-border buyers from Idaho and even North Dakota to Montana stores for large purchases. Montana car dealerships, in particular, benefit from the no-sales-tax environment.

Montana Total Tax Picture for a High Earner