If you rent a property in Montana for stays shorter than 30 days, you owe a combined 8% state lodging tax on what each guest pays, and properties inside designated resort communities may owe up to 4% more locally. The Montana short-term rental tax is collected from the guest, reported quarterly to the Department of Revenue, and paired with two upfront requirements: a Public Accommodation License from the state health department and a lodging tax account with the Department of Revenue. Platforms like Airbnb and VRBO handle the state tax on bookings made through them, but you are on the hook for any direct bookings and for keeping your account in good standing either way.
What the 8% State Tax Covers
The 8% is actually two separate taxes layered on the same transaction. A 4% sales tax on accommodations is imposed under Montana Code 15-68-102,1Montana Legislative Branch. Montana Code 15-68-102 – Imposition and Rate of Sales Tax and Use Tax Exceptions and a 4% lodging facility use tax is imposed under Montana Code 15-65-111.2Montana Legislative Services Division. Montana Code 15-65-111 – Tax Rate Both apply to any property offered to the public for overnight stays shorter than 30 days.
The statutory definition of “accommodations” is wide. It covers hotels, motels, vacation homes, condominiums, bed and breakfasts, guest ranches, dude ranches, hostels, apartments, timeshares, and even a single bedroom rented inside an owner-occupied home.3Montana Code Annotated. Montana Code 15-68-101 – Definitions A weekend guest in your spare room triggers the same tax rules as a downtown hotel booking.
Which Charges on the Bill Are Taxable
The 8% applies to the full amount the guest pays, not just the nightly rate. Mandatory add-ons bundled into the stay, such as cleaning fees and pet fees, are part of that total and are taxed. Charges that are separately stated and clearly unrelated to the lodging itself are excluded, including meals, transportation, and entertainment billed on their own line.4Montana Department of Revenue. Lodging Facility Sales and Use Tax
A good test: if the charge exists because the guest is staying in your property, it is almost certainly taxable. A cleaning fee the guest cannot opt out of counts. A separately invoiced guided fishing trip you arrange on the side does not. When the status of a charge is unclear, collecting the tax and letting the Department of Revenue sort it out later is the safer error.
Resort Community Add-On
Properties in certain tourism-heavy Montana towns face an additional local resort tax on top of the 8%. Montana Code 7-6-1502 authorizes qualifying resort communities to impose the tax within their boundaries.5Montana State Legislature. Montana Code 7-6-1502 – Resort Community Taxing Authority The base rate is capped at 3%, and since 2019 voters can approve an additional 1% earmarked for infrastructure, bringing the ceiling to 4%.6Montana Legislature. Montana Code 7-6-1503 – Limit on Resort Tax Rate Goods and Services Subject to Tax
Big Sky, West Yellowstone, Whitefish, Red Lodge, and Virginia City are among the communities currently collecting resort taxes, and each sets its own rate within the statutory cap. These local taxes are administered by the municipality or resort area district, not the Department of Revenue, so you file and pay them separately. A property inside a resort area can see a total tax of up to 12% on the guest’s bill. Call your city or county clerk to confirm whether your rental sits inside resort tax boundaries and what rate applies.
Who Collects the Tax: Platforms vs. Direct Bookings
Online platforms like Airbnb and VRBO are classified as “sellers” of accommodations under Montana law and must collect and remit both the 4% sales tax and the 4% use tax on the full guest payment.4Montana Department of Revenue. Lodging Facility Sales and Use Tax When a reservation comes through one of these platforms, the state portion is handled for you.
Direct bookings are different. Reservations taken through your own website, by phone, or by email bypass the marketplace, and you are responsible for collecting the full 8% and remitting it yourself. Local resort taxes may or may not be collected by the platform depending on the jurisdiction’s arrangement, so confirm that too. Even hosts who book exclusively through Airbnb need a Montana lodging tax account on file, because a single direct reservation or a change in the platform’s role puts the collection obligation back on you.
When a Guest Is Exempt
Exemptions from Montana lodging tax are narrow. The usual case is a federal employee on official business paying with a GSA SmartPay card that is centrally billed to the agency. Gold “Integrated,” red “Purchase,” and silver “Tax Advantage” cards all qualify. Blue “Travel” cards qualify only when the sixth digit of the card number is 6, 7, 8, 9, or 0; a sixth digit of 1 through 4 means the employee pays personally and the exemption does not apply.7Montana Department of Revenue. Tax Exemption on Lodging Accommodations Form
Personal credit cards, cash, and later reimbursement do not qualify, even when the government ultimately pays the employee back. The guest must complete the Department of Revenue’s Lodging Tax Exempt Form at the time of sale. Granting the exemption without the paperwork leaves you liable for the uncollected tax in an audit.
Public Accommodation License
Before listing a Montana property for short-term rental, you need a Public Accommodation License from the Department of Public Health and Human Services (DPHHS). It is a health and safety license, separate from your tax registration, and operating without one is a compliance problem on its own.
Applications go through your local county sanitarian, who schedules a pre-opening inspection. New construction and remodels need plan review approval first, and even a change of ownership triggers at minimum an on-site inspection before a new license issues. Annual fees scale with the number of rooms: $40 for 1 to 10 rooms, $80 for 11 to 25, and $160 for 26 or more. Some counties add their own plan review and inspection fees. The license renews annually and DPHHS mails a reminder to the address on file, so seasonal hosts should use a year-round mailing address to avoid missing it.8Montana Department of Public Health and Human Services. Public Accommodation License Application
Opening a Lodging Tax Account
With the license in hand, open a lodging tax account with the Department of Revenue through the TransAction Portal (TAP) at tap.dor.mt.gov.9Montana Department of Revenue. Payment and Filing Options You will need your federal identification number (an EIN for LLCs or partnerships, or your Social Security Number for a sole proprietor), the physical address of the rental, a mailing address for correspondence, and the date you first offered the property for short-term rental. A working email address on the account gets you automated reminders of upcoming deadlines.
Quarterly Filing Deadlines
Returns are filed quarterly through TAP, reporting total gross receipts for the three-month period. Due dates fall on the last day of the month after each quarter closes:4Montana Department of Revenue. Lodging Facility Sales and Use Tax
- First quarter (January through March): April 30
- Second quarter (April through June): July 31
- Third quarter (July through September): October 31
- Fourth quarter (October through December): January 31
File a zero return for any quarter the property sat empty. Skipping the filing flags the account as delinquent and triggers penalties even when no tax is owed.
Penalties for Late Filing or Payment
Late filing and late payment carry separate penalties, and they stack. The late filing penalty is 5% of the tax due per month the return is overdue, capped at 25%, with a minimum penalty of $50 regardless of how little tax is owed.10Montana Legislative Branch. Montana Code 15-1-216 – Uniform Penalty and Interest Assessments for Violation The late payment penalty on lodging tax runs 1.5% of the unpaid balance per month, capped at 15%. Interest also accrues at 3 percentage points above the federal prime rate. The $50 floor alone makes filing a zero return the cheaper choice.
Records You Need to Keep
Montana requires you to retain all records and supporting documents used to prepare your returns for at least five years from the due date of the return or five years from the date of payment, whichever is later.11Montana Secretary of State. Availability and Retention of Taxpayer Records That covers booking confirmations, nightly rate schedules, receipts for mandatory guest fees, platform payout statements, and copies of every Lodging Tax Exempt Form a government traveler fills out.
Download and archive platform-generated reports regularly instead of relying on the platform to keep them available for five years. If an audit lands and you cannot produce documentation, the department can assess tax based on its own estimates and you lose the ability to dispute the figures.
Income Tax on the Profit You Keep
The 8% lodging tax is a pass-through you collect from the guest. The profit left over is yours, and Montana taxes it as individual income. For the 2026 tax year, the state uses two brackets: 4.7% on taxable income up to $47,500 for single filers ($95,000 for married filing jointly), and 5.65% on income above those thresholds.12Montana Department of Revenue. HB337 2026-2027 Montana Individual Income Tax Changes
Taxable rental income is gross rent minus allowable expenses: mortgage interest, property insurance, repairs, utilities, depreciation, and platform fees paid to Airbnb or VRBO. Rental activity is generally reported on Schedule E of your federal return, and Montana uses federal adjusted gross income as its starting point. Tracking every rental-related expense directly reduces what the state’s rates apply to.
Local Zoning Can Still Shut You Down
Compliance with state tax and licensing rules does not override local law. Montana cities and counties have broad authority to regulate short-term rentals through zoning, permits, and operational standards, and the rules vary widely. Bozeman, for example, divides short-term rentals into three types based on owner occupancy and presence, with the strictest type barred from residential districts entirely. Municipal business license fees generally run from roughly $55 to $355 depending on the city.
Check with the local planning or zoning office before buying a property or listing an existing one. A rental that is fully square with Montana’s tax and licensing rules can still be ordered to stop operating if it runs afoul of a local ordinance.