Guide to Montana State Taxes for the Year 2025
Montana, known for its breathtaking landscapes and outdoor activities, also offers a unique tax landscape for its residents. Here's a breakdown of the key aspects of Montana's tax system.
Resort taxes might be imposed in some areas with populations under 5,500, adding to the state's revenue. However, the tax landscape is not all about additional costs.
Homeowners and renters in Montana aged 62 or older, who have lived in the state for at least nine months and resided at the same address for six months, might qualify for a tax credit of up to $1,150, provided their household income is under $45,000.
Montana does not tax Railroad Retirement benefits, offering a financial relief to those who rely on these benefits. The state's individual income tax is graduated, ranging from 4.70% to 5.90%, with the taxable income thresholds for the low and high rates being $21,100 for single filers and $42,200 for joint filers in 2025.
Income tax rates have seen a decrease due to changes in 2024. Property taxes in Montana are generally lower than in many other states, with the average effective property tax rate being approximately 0.84%.
Montana does not have a statewide sales tax. Instead, the state taxes cigarettes at $1.70 per pack, other tobacco products at 50% of the wholesale price, and alcoholic beverages differently. The tax on wine is $1.06 per gallon, the tax on beer is 14 cents per gallon, and liquor is state-controlled.
Montana taxes Social Security retirement benefits, although the amount taxed might differ from the federal taxable amount. The state also does not impose estate or inheritance taxes, making it one of the states that offer relief in these areas.
The tax on gasoline in Montana is 27 cents per gallon, and the tax on diesel is 28 cents per gallon. The tax on medical marijuana is 4%, and the tax on recreational marijuana is 20%.
In a somewhat surprising turn, middle-class families in Montana might find themselves in the top income tax bracket due to the state's graduated tax system.
In summary, Montana's tax landscape is a mix of taxes and tax credits, with some unique features such as the lack of a statewide sales tax and the gradual tax on income. It's always essential for residents to understand their tax obligations and potential benefits to make informed financial decisions.
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