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Helena, MT 59601

(406) 582-8822

504 West Main St.
Bozeman, MT 59715

Montana Tax Law

Montana Tax Laws

Montana is known as a state with one of the friendliest tax laws. The biggest tax advantage for residents of Montana is that there is no sales tax. In states like California, people pay as much as 8% for sales tax. So this type of savings is significant.

As a matter of fact, WalletHub, a personal finance website, conducted a survey and found that Montana tax laws were the fairest in the nation, with a fair distribution of tax burdens. Wealthy property owners and energy producers pay more to keep the government running.

In case if you are wondering, why does Montana not have sales tax? If there is sales tax, the burden is spreader evenly across the income earners. For example, a billionaire pay the same amount of taxes from grocery shopping as someone who earns minimum wage. That’s less fair.

Here is Montana’s income tax system that covers seven income brackets:

  • 1% on the first $2,800 of taxable income.
  • 2% on taxable income between $2,801 and $5,000.
  • 3% on taxable income between $5,001 and $7,600.
  • 4% on taxable income between $7,601 and $10,300.
  • 5% on taxable income between $10,301 and $13,300.
  • 6% on taxable income between $13,301 and $17,100.
  • 6.9% on taxable income of $17,101 and above.

 

You can reduce the amount of taxes you pay by contributing to nonprofit groups. There are other deductibles available under Montana’s tax laws.

For businesses, Montana’s tax rate is relatively simple. For corporation income, the rate is a flat 6.75%. Because of Montana’s friendly tax laws, it was ranked 6th best business tax climate in the U.S. by the Tax Foundation, a Washington, D.C.-based nonprofit think tank.

If a family member passed away and wanted to pass down the assets to the children, the assets will be taxed — called estate tax. This is very important part of the tax law because the difference of a smart decision making and a poor one is enormous. Hundreds of thousands of dollars are on the line when estate tax plays into the factor. It’s highly recommended to hire a lawyer to sort through the estate tax to ensure you save every cent from the tax.

However, if you have assets less than $5,450,000, you won’t owe any federal estate tax, and there is no Montana estate tax. This tax law was changed and Montana didn’t take in estate tax anymore after January 1, 2005.

A small Montana tax law secret can save you a lot of money. By forming a LLC in the state of Montana and owning a real property (such as a storage unit), you can purchase out of the state items with no sales tax. Why? The LLC (formed in Montana) owns the asset. For example, if you want to purchase a car in Louisiana and don’t want to pay sales tax, you can form a LLC in Montana and have the company purchase the car. It will save you thousands of dollars.

By getting a lawyer who is well versed with Montana tax law, you can receive many tax advantages, like mentioned above.

There are many other tax laws to consider about if you live in Montana. You can find out more by discussing with one of our lawyers. We will make sure that you are paying the fair amount of taxes and take advantage of incentives the state of Montana may offer you. It’s important to use every incentive because in the long run, you will save thousands of dollars (or even hundreds of thousands of dollars).

An example is the list of Montana’s tax credits that are available:

  • Adoption credit – This is given after adoption has been finalized and gives a credit of $1,000 per child.
  • Alternative Energy Production Credit
  • Alternative Energy Systems Credit
  • Alternative Fuel Conversion Credit
  • Biodiesel Blending and Storage Credit
  • College contribution credit
  • Contractors gross receipts tax credit
  • Dependent care assistance credit
  • Developmental disability account contribution credit
  • Elderly Care credit
  • Elderly homeowner/renter credit
  • Empowerment zone tax credit
  • Energy Conservation installation credit
  • Film employment production credit

 

These are only few of many tax credits that are available for you. You can consult with one of our lawyers to discuss about your current tax situation and we will help you determining the best course of actions.

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