The Tax Foundation

Montana

The Facts on Montana’s Tax Climate

Last updated July 1, 2009

Here are some basic facts on Montana’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 3 in Montana
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, Montana taxpayers had to work until April 3 (ranked 42nd nationally) to pay their total tax bill, ten days earlier than national Tax Freedom Day (April 13). Neighboring states' Tax Freedom Days are as follows: Idaho, April 12 (ranked 18th); Wyoming, April 5 (ranked 35th); North Dakota, April 1 (ranked 46th), and South Dakota, March 29 (ranked 47th).
Full study of Tax Freedom Day, nationwide and in each state

Montana's State/Local Tax Burden Well Below National Average
Estimated at 8.6% of income, Montana's state and local tax burden percentage ranks 40th nationally, well below the national average of 9.7%. Montana taxpayers pay $3,158 per capita in state and local taxes.  Montana has dropped 22 places since 1977, primarily by maintaining a zero rate on general sales.
Montana's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008

Montana's 2010 Business Tax Climate Ranks 6th
Montana ranks 6th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Idaho (18th), Wyoming (2nd), North Dakota (25th), and South Dakota (1st).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)

Montana's Individual Income Tax System
Montana's personal income tax system consists of seven separate brackets with a top rate of 6.9%, kicking in at an income level of $15,600. That rate ranks Montana 14th highest, among states levying an individual income tax. Montana's 2006 individual income tax collections were $817 per person, which ranked 28th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita 

Montana's Corporate Income Tax System
Montana's corporate tax structure consists of a flat rate of 6.75% on all corporate income. Among states levying corporate income taxes, Montana's rate ranks 28th highest nationally. In 2007, state-level corporate tax collections (excluding local taxes) were $188 per capita, which ranked the state 16th highest nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita 

Montana Levies No Sales Tax; Gasoline and Cigarette Taxes among the Highest in the Nation
Montana levies no general sales or use tax on consumers, joining Delaware, Alaska, New Hampshire and Oregon as the only states with no general sales tax. Montana's gasoline tax stands at 27.8 cents per gallon, which ranks 18th highest nationally. Montana's cigarette tax stands at $1.70 per pack of twenty, ranking 16th highest nationally. The gasoline tax was adopted in 1921 and the cigarette tax in 1947.
50-State Table of Sales and Excise Tax Rates
50-State Table of  State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita

Montana Property Taxes Comparatively Modest
Montana is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Montana's localities collected $918.36 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, however, unlike most other states, Montana collects substantial property tax revenue: $206.48 per capita during FY 2006. That brings its combined state/local property tax collections to $1,124.85 per capita, ranking 22nd nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Montana is a Beneficiary State
Montana taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of federal tax collected in 2005, Montana citizens received approximately $1.47 in the way of federal spending. This ranks the state 11th highest nationally and represents a rise from 1995 when Montana received $1.46 per dollar of taxes in federal spending (6th highest nationally). Neighboring states and the amount of federal spending received per dollar of federal tax collected are: Idaho ($1.21), Wyoming ($1.11), North Dakota ($1.68), and South Dakota ($1.53).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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