Crossing a state line into or out of Montana

Montana taxes its residents on income earned anywhere, and taxes non-residents on work done inside it. Which return you file depends on which direction you commute.

Montana borders 4 states. They fall into 3 different situations, and which one applies decides whether you file one return or two.

Where Montana has a reciprocity agreement

Montana has wage reciprocity with North Dakota. Work in one of these and it will not tax your wages at all: you file its exemption certificate with your employer there, which stops its withholding, and report everything to Montana. There is no nonresident return.

Work state	Exemption certificate	Its tax on your wages
North Dakota	not in the 2026 dataset, ask the state	$0

Reciprocity covers wages paid by an employer. It does not cover self-employment income, so a 1099 worker in Montana generally still sources income to where the work was done.

Where you file a nonresident return and claim a credit

Montana has no agreement with Idaho. Work in one of these and you file a nonresident return there, report the same income again to Montana, and claim a credit for what you already paid. The credit is capped at your Montana liability, so you are not taxed twice, the combined bill lands at roughly the higher of the two rates.

Work state	Its tax	Montana after credit	Total	Rate that governs
Idaho	$3,710	$0	$3,710	Idaho

Where the work state takes nothing

South Dakota and Wyoming levy no personal income tax, so there is no return to file there and no credit to claim. But Montana still taxes the wages as a resident. The catch is withholding: an employer in South Dakota or Wyoming has no state income tax to withhold, so nothing is taken out for Montana either. The liability is real and nothing is being set aside against it, which usually means Montana estimated payments.

What Montana itself takes across a salary range

A single filer, taking the standard deduction. This is the figure every arrangement above is measured against, the tax Montana charges a resident, whether the work happened inside the state or over a line:

Wages	Montana tax	Effective rate
$45,000	$1,514	3.36%
$70,000	$2,927	4.18%
$120,000	$5,752	4.79%

Coming the other way: living in a no-income-tax state, working in Montana

South Dakota and Wyoming border Montana and levy no personal income tax of their own. A resident of South Dakota or Wyoming who works in Montana has the simplest arrangement on this page and the least room to improve it: Montana taxes the wages earned inside it, $2,927 on $70,000, there is no home-state return, and so there is nothing to claim a credit against. Living across a border that charges nothing does not reduce the Montana bill by a cent.

Reciprocity cannot help either, even where Montana has agreements: reciprocity shifts the income to the home state's return, and a state with no income tax has no return to shift it to.

What Montana charges as your home state

Montana taxes income on 2 graduated brackets for 2026, from 4.7% up to 5.65%. Because wages stacks on top of any other income, a second source can push part of it into the next bracket.

Montana allows its own standard deduction of $14,000 for a single filer, which is separate from the federal standard deduction.

On the 2026 rate itself: top rate reduced from 5.9% in 2025. Essentially a flat tax with small lower bracket.

Montana is one of the twelve states that still taxes Social Security benefits, which matters if you are drawing benefits alongside wages.

Montana is also one of five states with no general sales tax, so the total tax picture is lighter than the income tax line alone suggests.

State income tax on wages only, 2026 rates. Not tax advice, what this does and doesn't cover.