Retiring in Montana: how your income is taxed
Montana is less tax-friendly for retirees. On a typical retirement income it ranks #48 of 51 for the lowest state income tax.
The rules in Montana
- Social Security: Montana taxes Social Security to the same extent it is taxed federally (up to 85% of benefits); its old separate calculation was replaced in 2024.
- Pensions: Pensions are taxed as regular income (the old partial pension exemption was repealed from 2024), except that at 65 and older each taxpayer can subtract $5,660 (the 2025 amount, adjusted for inflation each year) from any income, which shelters part of a pension. Military retirement: 50% can be exempt, but only for retirees with Montana earned income (or survivors), subject to residency and five-year limits.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals are taxed as regular income, except that the same 65-and-older subtraction ($5,660 per person in 2025, adjusted for inflation) applies to any income, so it can shelter part of these withdrawals.
- At 65 and older: Montana starts from federal taxable income, so the extra federal standard deduction at 65 and the federal senior deduction (up to $6,000 per person, 2025–2028) carry over. Filers 65 and older also subtract $5,660 each (2025, adjusted yearly).
Calculate your Montana retirement taxes
State income tax in Montana: $1,529 a year
In Montana, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In Montana you'd pay about $1,529 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $64,135 (8.4% total).
Montana ranks #48 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Montana
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $1,529 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $5,635 | $3,533 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply Montana's main exclusions and may differ for income-tested credits.
States with lower retirement taxes
Moving to Montana in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Montana come from (IRS migration data, 2022–2023).
- California to Montana
- Washington to Montana
- Colorado to Montana
- Oregon to Montana
- Idaho to Montana
- Texas to Montana
Frequently asked questions
Does Montana tax Social Security?
Taxed. Montana taxes Social Security to the same extent it is taxed federally (up to 85% of benefits); its old separate calculation was replaced in 2024.
Does Montana tax pensions?
Partly taxed. Pensions are taxed as regular income (the old partial pension exemption was repealed from 2024), except that at 65 and older each taxpayer can subtract $5,660 (the 2025 amount, adjusted for inflation each year) from any income, which shelters part of a pension. Military retirement: 50% can be exempt, but only for retirees with Montana earned income (or survivors), subject to residency and five-year limits.
Does Montana tax 401(k) and IRA withdrawals?
Partly taxed. 401(k) and IRA withdrawals are taxed as regular income, except that the same 65-and-older subtraction ($5,660 per person in 2025, adjusted for inflation) applies to any income, so it can shelter part of these withdrawals.
Is Montana a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, Montana charges about $1,529 in state income tax, ranking #48 of 51 (lowest tax first).
Related
Sources: revenue.mt.gov, mca.legmt.gov, revenue.mt.gov (2). Rules reviewed . Some 2026 amounts were not yet published or sources differed; confirm with the state revenue department.