Montana is one of only five states with no general sales tax, making it attractive for retailers and shoppers. It does tax income: C corporations pay 6.75%, and individuals pay 4.7% and 5.65% in 2026, after cuts passed in 2025. Formation and annual fees are some of the lowest in the country, but businesses with significant equipment pay property tax on business personal property.
This guide covers Montana's business taxes for 2026, with worked examples and comparisons with its neighbors.
Montana business taxes at a glance
A Montana C corporation pays a flat 6.75% on profit. Pass-through owners pay 4.7% on the first $47,500 of taxable income and 5.65% above it. Retailers don't collect a general sales tax, though resort towns have local resort taxes and lodging and rental cars are taxed statewide. LLCs pay $35 to form and $20 a year to file annual reports. Businesses with substantial equipment pay property tax on it, and real estate is taxed locally. Montana's overall tax burden is moderate, with income taxes above those of its no-income-tax neighbors, Wyoming and South Dakota.
Corporate income tax
| Item | 2026 |
|---|---|
| Corporate income tax rate | 6.75% |
| Water's-edge election rate | 7% |
| Minimum tax | $50 |
- Apportionment: Montana moved toward single sales factor apportionment; check the current phase-in rules for your tax year.
- Combined reporting: Required for unitary groups, worldwide by default unless a water's-edge election is made.
- Credits: New and expanded industry credits, research credits and credits for investment in qualifying equipment.
- Returns: Form CIT is due on the 15th day of the fifth month after year-end.
Personal income tax and pass-through owners
| Taxable income (single, 2026) | Rate |
|---|---|
| $0 to $47,500 | 4.7% |
| Over $47,500 | 5.65% |
Montana simplified its income tax in 2024, starting from federal taxable income and moving to two brackets. A 2025 law further reduces the top rate and widens the 4.7% bracket in stages.
- Capital gains: Taxed at 3% and 4.1%.
- LLC owners, partners and sole proprietors pay these rates on profit.
- S corporation shareholders pay on their share.
- PTE election: Partnerships and S corporations can elect to pay tax at the entity level.
- Nonresident owners: Pass-through entities withhold tax or file composite returns for nonresident owners.
Sales and resort taxes
Montana has no general statewide sales tax. Several specific taxes apply instead:
| Tax | Rate |
|---|---|
| General sales tax | None |
| Local resort taxes (Big Sky, Whitefish, West Yellowstone and other resort areas) | Up to about 4% |
| Lodging facility use tax and lodging sales tax | 4% each (8% combined) |
| Rental vehicle tax | 4% |
Montana businesses selling into other states may need to collect those states' sales taxes under economic nexus rules, but they don't collect Montana sales tax.
Payroll and property taxes
- Unemployment insurance: Employers pay on a wage base of more than $40,000, among the highest in the country. New employers pay rates based on their industry.
- Business equipment tax: Class 8 property is taxed at a reduced rate, with a large exemption for small businesses. Businesses must file a personal property reporting form with the Department of Revenue.
- Real property: Commercial property is taxed at local mill levies. Property values in resort areas have risen sharply in recent years.
Forming a business in Montana: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | $35 | $35 |
| Annual report | $20 (due April 15) | $20 (due April 15) |
| Franchise tax | None | None |
| Registered agent | Required | Required |
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Taxable income | $500,000 |
| Montana corporate tax at 6.75% | $33,750 |
| Federal tax at 21% on $466,250 | $97,913 |
| Total income tax | $131,663 (26.3%) |
For a single LLC owner with $150,000 of Montana taxable income, state tax is about $8,024. At $75,000 it is about $3,786.
How Montana compares with its neighbors
| State | Corporate rate | Top personal rate | State sales tax |
|---|---|---|---|
| Montana | 6.75% | 5.65% | None |
| Idaho | 5.3% | 5.3% | 6% |
| Wyoming | None | None | 4% |
| North Dakota | 1.41% to 4.31% | 2.5% | 5% |
| South Dakota | None | None | 4.2% |
Montana is the only state in the region with no sales tax, but its income taxes are the highest. Wyoming and South Dakota have no income tax but do have sales taxes, and North Dakota's income taxes are lower than Montana's. For retail businesses, Montana's lack of sales tax can be a meaningful advantage. For high-earning service businesses, Wyoming or South Dakota may be cheaper.
Choosing an entity in Montana
- LLC: Very low fees and pass-through treatment at 4.7% and 5.65%.
- S corporation: Same personal rates, with federal payroll tax savings.
- C corporation: 6.75% state tax plus 21% federally. Corporations' rate is higher than the top personal rate, so most small businesses choose pass-through treatment.
Who pays the most in Montana
Montana's tax system is weighted toward income and property rather than consumption. Pass-through owners with incomes above $47,500 pay 5.65% on each additional dollar. Businesses with heavy equipment, such as construction, agriculture and mining operations, pay property tax on that equipment above the exemption. Resort area businesses collect resort taxes and pay higher property taxes driven by rising values. Retailers and their customers, by contrast, pay no general sales tax.
Tax planning tips for Montana businesses
File your personal property reporting form. Even businesses below the exemption threshold should file so the Department of Revenue knows they qualify. Failing to file can lead to estimated assessments.
Take advantage of lower capital gains rates. Business owners selling assets held long term pay 3% or 4.1% rather than 4.7% or 5.65%. Structure asset sales with this in mind.
Collect other states' sales tax where required. Montana has no sales tax, but Montana sellers shipping to customers in other states may still have obligations there.
Doing business across Montana
Montana is the fourth-largest state by area but has just over one million people, so many businesses serve customers spread across long distances or sell into neighboring states. That matters for tax: a Montana retailer that ships into Idaho, Wyoming or the Dakotas may cross those states' economic nexus thresholds and need to register to collect their sales taxes, even though Montana itself has none. Service businesses that send employees to work in other states may also owe those states' income or withholding taxes. Agricultural producers benefit from a range of exemptions on farm property and equipment, and the state's energy, mining and timber industries pay severance and resource taxes that fund much of the state budget.
Montana's resort taxes deserve special attention for hospitality businesses. Each resort community sets its own rate and list of taxable goods, which can include lodging, restaurant meals, alcohol and luxury items. Businesses in those areas file returns with the local government rather than the state.
Recent changes for 2025 and 2026
- Personal income tax cuts passed in 2025, with the top rate falling and the lower bracket widening in stages.
- Property tax changes aimed at shifting more of the burden away from primary residences.
- Simplified income tax based on federal taxable income, in place since 2024.
Is Montana a good state for business?
Advantages
- No general sales tax
- Very low formation and annual report fees
- Lower capital gains rates
- Strong tourism, agriculture and natural resources economy
Drawbacks
- Higher income taxes than neighboring Wyoming and South Dakota
- Property tax on business equipment
- Small, dispersed labor market
- Rising real estate costs in popular areas
Compliance checklist
- File Articles of Organization or Incorporation with the Secretary of State.
- Register with the Department of Revenue for withholding and income tax.
- Register with the Department of Labor and Industry for unemployment insurance if you hire.
- Register for lodging, rental car or resort taxes if they apply.
- File the annual report by April 15.
- File the personal property reporting form and annual income tax returns.
Compare Montana with its neighbors below or estimate your taxes in the United States calculator. See LLC taxes for more.