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Montana runs a two-rate income tax for 2026 under HB 337: 4.7% on taxable income up to $47,500 (single; $95,000 married) and 5.65% above. Montana's 2026 withholding applies the federal standard deduction ($16,100 single / $32,200 married). Long-term capital gains keep a special credit worth about 2% of the gain.

On $65,000 single: taxable income after the federal standard deduction is $48,900. The first $47,500 is taxed at 4.7% ($2,232.50) and the remaining $1,400 at 5.65% ($79.10) — roughly $2,312 total, a 3.6% effective rate.

Montana fully exempts Social Security and allows a partial pension/retirement deduction ($4,310 per person against qualifying income). The state is one of the few that still allows deducting federal income taxes paid (capped), which trims the effective rate — a legacy provision most states have abandoned.

Property tax averages 0.91%, and there's no general sales tax at the state level on most purchases — Montana is one of the few zero-sales-tax states (resort areas can levy small local options). Combined with the moderate income tax, Montana's total burden is genuinely low for a state with no sales tax.

Filing in Montana: the resident return is Form 2, filed with the Montana Department of Revenue by April 15. Montana offers free e-file, and the capital gains credit is claimed on the same form.