Does Montana Tax Social Security?
Short answer: yes, but many retirees pay nothing
Montana taxes Social Security benefits more heavily than the other seven states that still tax it — its retiree-specific break is a flat subtraction rather than an income-based exemption.
Taxpayers age 65 and older receive only a $5,500 subtraction from federally taxable income, regardless of how much Social Security they receive. Montana’s top income tax rate is 5.65%, applying to income over $47,500 for single filers or $95,000 for joint filers.
- Whether you owe depends on your adjusted gross income and filing status, not just on living in Montana
- Most low- and middle-income retirees in Montana end up owing little or nothing on their Social Security specifically
- These thresholds are current for 2026 and are set by Montana law, which can change — verify before relying on any specific number, including this one
Other retirement income isn’t exempt
Social Security is partly exempt for many filers, but other retirement income generally isn’t. Pensions, 401(k) and IRA distributions, and investment income are subject to Montana’s state income tax like any other income.
Montana’s income tax rate
Montana has a graduated income tax with rates from 4.7% to 5.65%. Because state tax rates and brackets change from year to year, check the Tax Foundation’s current state income tax data before relying on any specific number, including this one.
Does Montana tax Social Security benefits?
What is Montana's income tax rate?
Montana has a graduated income tax with rates from 4.7% to 5.65%, which is the rate that applies once your Social Security income crosses the exemption thresholds described above.
Is other retirement income like pensions and 401(k) withdrawals taxed in Montana?
Generally yes — Montana taxes pensions, 401(k) and IRA distributions, and investment income at its regular state income tax rate, separately from the Social Security-specific rules above.
Where can I verify current Montana tax rules?
The figures above are sourced from Kiplinger’s state-by-state Social Security tax tracker, current as of 2026. For income tax rates generally, the Tax Foundation publishes current state-by-state data. Thresholds and rates change from year to year, so confirm current numbers before making a decision based on them.
Beyond taxes
Taxes are one factor in a retirement location decision, not the whole picture. Healthcare access, cost of living, climate, and proximity to family typically matter as much or more. If Montana otherwise fits what you’re looking for, its tax treatment of Social Security is worth weighing carefully alongside its income thresholds — just don’t let it be the only factor you weigh, and talk to a tax advisor about how your specific retirement income will be taxed.
This article is for educational purposes only and isn't legal, financial, or tax advice. See our Disclaimer for details.
