Does Montana tax Social Security benefits?

Montana taxes Social Security to the same extent it is taxable on your federal return — there is no separate state exclusion after the 2024 reform. If 85% of your benefit is federally taxable, that same 85% is included in Montana income. Lower-income retirees may have 0% or 50% included.

Does Montana tax pensions and 401(k) withdrawals?

Yes. Montana fully taxes pension, annuity, IRA, 401(k), and 403(b) distributions as ordinary income at the regular state rates. Retirees age 65 and older receive a larger standard deduction or subtraction, which lowers the taxable base but does not exempt this income entirely.

What are Montana's income tax rates?

After the 2024 reform Montana uses two brackets tied to your federal taxable income: 4.7% on the lower band and 5.9% on income above the bracket threshold. The threshold is roughly $20,500 for single filers and $41,000 for joint filers, adjusted annually.

Is Montana tax-friendly for retirees?

Montana is moderately tax-friendly: it has no sales tax and no estate or inheritance tax, but it does tax most retirement income including pensions and Social Security. The higher senior deduction softens the bite, so the overall burden depends heavily on your income mix.

Is this calculator exact?

No — it is a planning estimate. It excludes federal tax, the precise standard deduction and 65+ subtraction, and credits, and it uses representative bracket thresholds. Use it to gauge order of magnitude, then confirm figures with the Montana Department of Revenue or a tax professional.

Montana Retirement Income Tax Calculator

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Montana taxes most retirement income but offers no sales tax and a higher deduction for residents age 65 and older. After the 2024 reform, the state uses two brackets — 4.7% and 5.9% — tied to your federal taxable income, and it follows the federal taxable amount of Social Security rather than using its own formula. This tool estimates the state income tax on your blend of Social Security, pension, and retirement-account income.

How it works

The calculator builds Montana taxable income from your income streams, then applies the two brackets:

taxable SS   = Social Security benefit × federally taxable share (0/50/85%)
MT income    = taxable SS + pension + IRA/401(k) + other
low band     = min(MT income, threshold) × 4.7%
high band    = max(0, MT income − threshold) × 5.9%
state tax    = low band + high band

The threshold separating the two rates is about $20,500 for single filers and $41,000 for joint filers. Pensions and traditional retirement-account withdrawals are fully taxable as ordinary income; Roth withdrawals are not.

Example and notes

A single retiree with a $24,000 Social Security benefit (85% taxable), $18,000 pension, and $12,000 in 401(k) withdrawals has roughly 20,400 + 18,000 + 12,000 = 50,400 of Montana taxable income. The first $20,500 is taxed at 4.7% and the remaining ~$29,900 at 5.9%, for an estimated state tax near $2,729 before deductions and credits. The figure excludes federal tax and the precise senior deduction — confirm specifics with the Montana Department of Revenue.