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.
Assumptions behind this comparison
The ranking uses a full-year resident, single filer age 67, with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals under 2026 rules. It models a general private pension and traditional IRA withdrawals. Public or military pension exceptions, early-distribution penalties and itemized deductions require separate checking. Maryland and Indiana estimates include an approximate statewide-average county income tax; other local income taxes are not modeled. A state with no income tax differs from a state that exempts only specified retirement income.
The joint table uses two spouses age 67, with each income category split equally between them. Personal exclusions follow each spouse's own eligible income; some states instead allow a joint cap. The calculator initially assigns household income to you and lets you enter your spouse's actual age and share. Read the source instructions for your pension type.
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- Pensions: Pensions are taxed as regular income (the old partial pension exemption was repealed from 2024), except that at 65 and older each taxpayer can subtract $5,660 (the 2025 amount, adjusted for inflation each year) from any income, which shelters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. Each filer 65 and older also gets a general subtraction against joint taxable income, even if that person has no pension or IRA withdrawals. This model uses the published 2025 amount of $5,660 per person; the 2026 inflation-adjusted amount may differ.
Calculate your Montana retirement taxes
State income tax in Montana: $1,529 a year
In Montana, qualifying employer-plan withdrawals can receive the pension exclusion while traditional IRA withdrawals do not. Keep each account in its own field when changing state; the calculator applies the state-specific treatment.
The employer-plan field supports federally taxable private 401(k) / 403(b) retirement distributions owned by someone aged 60 or older. Earlier distributions and Hawaii, Mississippi or Pennsylvania employer-plan scenarios are not calculated; funding or plan retirement eligibility needs a separate check. Enter each amount once; do not include completed rollovers, Roth payments or special public/military plans.
Older shared links did not identify employer-plan withdrawals separately. Pension and IRA amounts have been left unchanged. If an old amount includes 401(k) or 403(b) withdrawals, move that portion into the employer-plan field before comparing states; the tool cannot infer the original account type.
Household totals include taxable private pensions and traditional retirement withdrawals. Other ordinary income means taxable interest and ordinary dividends; capital gains, qualified dividends, tax-exempt interest, wages, Roth distributions and special public or military pension rules need a separate calculation. Disability and survivor eligibility are not assessed by this tool. Age bands represent the listed ages for the full year; midyear eligibility and birth-date exceptions need checking.
Local income taxes are not modeled here, except the approximate statewide-average county rates included when you select Maryland or Indiana.
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 traditional IRA withdrawals | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals | $1,529 | $0 | $4,336 |
| $40,000 Social Security, $40,000 private defined-benefit pension, $50,000 traditional IRA withdrawals, $10,000 other income | $5,635 | $3,533 | $19,812 |
Age 67, 2026 rules including the federal senior deduction. For the joint column, income is the household total, both spouses are 67, and each owns 50% of every income category. State estimates apply Montana's main exclusions and may differ for income-tested credits.
Lower-tax states for the age-67 example
The amounts below use the fixed example above. Comparison links carry the last valid household entered in the calculator, including each spouse's income and age; the destination recalculates that household. Finish correcting invalid entries before using a comparison.
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 private defined-benefit pension, $20,000 traditional IRA withdrawals, 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), revenuefiles.mt.gov. Rules reviewed . Some 2026 amounts were not yet published or sources differed; confirm with the state revenue department.