Business Taxes

Montana ranked #9 in Best Tax Code for Business by The Tax Foundation,

Montana ranked 12th Best in State and Local Tax Burden by The Tax Foundation,

AND Montana has NO sales tax and NO inventory tax!

Experience our friendly business climate in Montana, where our tax code ranks as one of the best for businesses in the country and certainly one of the best in the West!

Corporation License Tax

Montana's corporation tax is 6.75% and is calculated on net income earned in Montana. Corporations making a "water's edge" election are required to pay tax at a rate of 7%. Corporations whose only activity in Montana consists of making sales, and do not own or rent real estate or tangible personal property, and whose annual gross volume of sales made in Montana does not exceed $100,000, may elect to pay a tax of 1/2 of 1% of gross sales.

Please visit the Montana Department of Revenue for more detailed information on the Corporation License Tax.

Property Tax

In Montana, most real estate, improvements, and personal property are appraised and taxed. Property tax liability is calculated based property classes, tax rates and calculation formulas established by the legislature. Currently, eleven classes of property are taxed. These property classes include metal and non-metal mines; agricultural land; residential, commercial, and industrial land and improvements; business equipment; forest land; various utilities and more. Property owned by companies that is single and continuous and is in more than one county (such as railroads, telecommunications, electric utilities and pipelines) is centrally assessed.

The Montana Department of Revenue provides detailed information on the eleven different classes of property and how those taxes are assessed.

The following calculations are used to determine general property tax:

Value X Tax Rate = Taxable Value
Taxable Value X Mill Levy = General Property Tax

The following chart is an example of how Commercial Property taxes are assessed:

Commercial Property Tax chart
* 1/6th of the increase in value from reappraisal is added to the prior year's Phase-in Market Value until the reappraisal value is fully phased-in, over the 6-year reappraisal cycle. For 2006 4/6th (66.7%) of the $700,000 increase from reappraisal would be phased-in.
** Mill levies vary by taxing jurisdictions.

Individual Income Tax

The average income tax liability of a Montana resident was $1,254 in the 2004 tax year.

In Montana, income is taxed according to a graduated rate structure with rates ranging from 1% to 6.9% of taxable income. Like most other states, Montana's income tax substantially relies on federal tax code. Taxable income is derived from gross income by making certain adjustments and taking a variety of allowable deductions and exclusions. Montana residents are taxed on all income, regardless of source, with the exception that Montana law exempts certain types of income. Part-year residents and nonresidents are taxed on all income derived from, or connected to, Montana sources. Additionally, part-year residents are taxed on all non-Montana source income generated during or attributable to the period of the tax year in which they resided in Montana. Click here for details on the individual income tax rates for the 2005 tax year.