Yes, Montana does tax Social Security benefits, but only to the same extent the federal government taxes them. Starting with the 2024 tax year, Montana scrapped its old state-specific deduction system and now begins its calculation with your federal taxable income. Whatever amount shows up as taxable Social Security on line 6b of your federal Form 1040 is the same amount Montana taxes. No separate state worksheet, no second threshold to clear.1Montana Department of Revenue. Montana Tax Simplification Resource Hub
Montana is one of only a handful of states that taxes these benefits at all, so the federal number carries more weight here than in most places. If none of your benefits are taxable federally, none are taxable in Montana either.
How Much of Your Benefits Are Taxable
Because Montana defers to the federal figure, the IRS formula is what decides your state liability. The IRS looks at your “provisional income,” which is your adjusted gross income, plus any tax-exempt interest, plus half of your total Social Security benefits for the year.2IRS. Publication 915 – Social Security and Equivalent Railroad Retirement Benefits That number gets compared against two sets of thresholds in the tax code:3Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
- Provisional income below $25,000 (single) or $32,000 (married filing jointly): none of your Social Security is taxable, federally or in Montana.
- Provisional income between $25,000 and $34,000 (single) or $32,000 and $44,000 (joint): up to 50% of your benefits become taxable.
- Provisional income above $34,000 (single) or $44,000 (joint): up to 85% of your benefits can be taxed. The share never climbs past 85%, no matter how high your income goes.
These thresholds have not been adjusted for inflation since Congress wrote them in 1993. Each year’s cost-of-living adjustment pushes more retirees across the lines, so a modest pension combined with a typical benefit check can land you squarely in the 85% tier.
Montana’s Tax Rates on the Taxable Portion
Once the taxable Social Security amount is baked into your Montana taxable income, it is taxed at Montana’s regular rates. For 2026, the state uses two brackets:4Montana Department of Revenue. Updated Wage Withholding Tables and MW-4 Now Available
- 4.7% on taxable income up to $47,500 (single), $71,250 (head of household), or $95,000 (married filing jointly).
- 5.65% on taxable income above those thresholds.
Montana adopts the federal standard deduction, which reduces your taxable income before the rates hit. Itemizers must add back any state income tax deduction claimed on the federal return.
The Subtraction for Taxpayers 65 and Older
Montana offers a subtraction aimed squarely at retirees. If you are 65 or older, you can subtract $5,660 from your federal taxable income on the 2026 Montana return. If both spouses on a joint return are 65 or older, the amount doubles.5Montana Department of Revenue. 2026 Montana Publication 1 The figure is indexed for inflation; it started at $5,500 when the current system took effect.1Montana Department of Revenue. Montana Tax Simplification Resource Hub
The subtraction applies to all your Montana taxable income, not just Social Security. But because it lowers the base the state taxes, it indirectly shrinks the bill on your benefits. For a single retiree whose only taxable income is Social Security, $5,660 can erase a meaningful share of what the state would otherwise collect.
Railroad Retirement Benefits Are Different
If some or all of your retirement income comes from the Railroad Retirement Board rather than Social Security, those payments are fully exempt from Montana income tax. You subtract Tier I and Tier II Railroad Retirement benefits from your federal taxable income when filing in Montana.5Montana Department of Revenue. 2026 Montana Publication 1 This exemption traces to federal law shielding railroad benefits from state income taxes, and it sits apart from the Social Security rules above.
Reporting and Estimated Payments
Taxable Social Security is reported on Montana Form 2 using the same figure from line 6b of your federal 1040. There is no separate state worksheet. The return is due April 15, with extensions available through October 15.6Montana Department of Revenue. 2025 Montana Individual Income Tax Return Form 2 Instructions
Retirees whose pensions and Social Security do not have enough tax withheld may owe quarterly estimated payments. Montana requires them if your tax liability after credits and withholding will be $500 or more. The due dates are April 15, June 15, September 15, and January 15 of the following year.7Montana State Legislature. Montana Code 15-30-2512 – Estimated Tax, Payment, Exceptions, Interest You can sidestep the underpayment penalty by paying at least 90% of your current-year tax or 100% of last year’s, whichever is lower.
Montana also gives new retirees a cushion: if you retire at age 62 or older, estimated payments are not required during your retirement year or the year that follows.7Montana State Legislature. Montana Code 15-30-2512 – Estimated Tax, Payment, Exceptions, Interest After that grace window closes, set up withholding on your pension or Social Security, or start the quarterly schedule.