Tax policy in Montana

in Montana

Fiscal Budgets Montana state budget and finances Tax policy in Montana Finance Financial regulation in Montana Pensions Public pensions in Montana Pension health in Montana Civil liberties Affirmative action in Montana Campaign finance requirements in Montana Campaign finance requirements for Montana ballot measures Nonprofit regulation in Montana Education Charter schools in Montana Higher education in Montana Public education in Montana School choice in Montana Elections Ballot access Ballot access requirements for political candidates in Montana Ballot access requirements for political parties in Montana Political parties in Montana Ballot access requirements for presidential candidates in Montana Redistricting in Montana Voting in Montana Energy and Environment Energy policy in Montana Fracking in Montana Oil and gas extraction on federal land in Montana Endangered species in Montana Environmental policy in Montana Healthcare Healthcare policy in Montana Medicaid spending in Montana Effect of the Affordable Care Act in Montana Immigration Immigration in Montana

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Tax policy in Montana

Tax rates in 2017

Personal income tax: 1% to 6.9%

State sales tax: No state sales tax

Corporate income tax: 6.75%

Tax revenues in 2016

Total tax collections: $2.63 billion

Tax collections per capita: $2,521

Total state expenditures • State debt • Montana state budget and finances

Montana generates the bulk of its tax revenue by levying a personal income tax and select sales taxes (otherwise known as excise taxes). The state derives its constitutional authority to tax from Article VIII of the state constitution.^[1][2]

Tax policy can vary from state to state. States levy taxes to help fund the variety of services provided by state governments. Tax collections comprise approximately 40 percent of the states' total revenues. The rest comes from non-tax sources, such as intergovernmental aid (e.g., federal funds), lottery revenues and fees. The primary types of taxes levied by state governments include personal income tax, general sales tax, excise (or special sales) taxes and corporate income tax.^[3]

Tax rates

Personal income tax

See also: Personal income tax

Montana utilized a personal income tax rate ranging from 1 percent to 6.9 percent in 2017. An individual's tax liability varies according to his or her tax bracket. A tax bracket is the income range to which a tax rate applies.^[4]

The table below summarizes personal income tax rates for Montana and neighboring states in 2017.^[4]

Personal exemptions

States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation. ^[5]

Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions for Montana and its neighboring states as reported by the Tax Policy Center are reported in the chart below.^[6]

Capital gains tax

See also: Capital gains tax

A capital gains tax is a tax levied on the profit gleaned from the sale of a capital asset. Examples of capital assets include stocks, businesses, land parcels, homes, personal items and more. Capital gains are taxable at both the federal and state levels. While the federal government taxes capital gains at a lower rate than regular personal income, states usually tax capital gains at the same rates as regular income. ^[7][8][9]

The table below summarizes uppermost capital gains tax rates for Montana and neighboring states in 2015.

Sales tax

See also: Sales tax

Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.25 percent in California. Additionally, many states allow the levying of local sales taxes, which are then added to the state's tax.

Montana did not levy a sales tax in 2017. The table below displays the state tax rates, average local tax rates, and average combined tax rates for Montana and its neighboring states.^[10]

The table below summarizes sales tax rates for Montana and neighboring states in 2017 as well as the state's policy with respect to types of items commonly exempted from sales tax (i.e., food, prescription drugs and nonprescription drugs).^[11]

Excise taxes

See also: Excise taxes

Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is then included in the sale price of the item and passed on to the consumer. The tables below provide excise tax rates for motor fuel, alcohol and cigarettes in Montana and neighboring states.^{[12][13][14][15]}

Corporate income tax

See also: Corporate income tax

Montana levies a corporate income tax rate of 6.75 percent. The table below compares the corporate income tax rates of some of its neighboring states.^[16][17]

Property tax

See also: Property tax

Most often, property tax applies to real estate, although some states levy property taxes on other types of personal property, such as automobiles. Generally speaking, an individual's property tax liability is determined by the tax rate and the tax base, which is "determined by both the assessed value of the property and ... the share of the assessed value that is subject to tax." To learn more about property taxes, including tabulation methods, see this page. Property tax rates can vary substantially from locality to locality within a state.^{[18][19][20] [18][19]}

The table below provides the mean amount of property taxes paid in 2012, as well as property tax as a mean percentage of home value for 2014, in Montana and neighboring states.^[18]

The table below lists per capita state and local property tax collections for Montana and neighboring states for fiscal year 2013.^[21]

Estate and inheritance taxes

See also: Estate and inheritance taxes

Estate and inheritance taxes are levied on the property of deceased individuals (decedents). Generally speaking, an estate tax is applied to the value of a decedent's property and is paid from the estate before distribution to any heirs. By contrast, an inheritance tax is paid by the heir or heirs of a decedent's assets.^[22][23][24]

Montana does not levy an estate tax, although residents are liable for the federal estate tax. The table below summarizes the estate tax rates for Montana and neighboring states in 2016.^[24]

Tax revenues

See also: Montana state budget and finances

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.^[25]

The table below lists 2016 tax collections by source as percentages of total collections. About 49.5 percent of Montana's total state tax collections came from income taxes.^[25]

Tax ballot measures

Voting on taxes
Ballot measures
By state
By year
Not on ballot
Local City taxes County taxes School taxes Property taxes Sales taxes Income taxes Other taxes

See also: Taxes on the ballot and List of Montana ballot measures

Ballotpedia has tracked the following ballot measures relating to taxes in Montana.

1. Montana University System Tax Levy, LR-113 (1998)
2. Montana Sales Tax Increase, LR-111 (June 1993)
3. Montana Tobacco Sales Tax, I-149 (2004)
4. Montana Voter Approval for Tax Increases, CI-75 (1998)
5. Montana Liquor Tax, IR-59 (1958)
6. Montana University of Montana Levy, R-61 (1958)
7. Montana New Property Tax Elimination, CI-105 (2010)
8. Montana Vehicle Tax Revision, LR-115 (2000)
9. Montana Repealing State Inheritance Tax, LR-116 (2000)
10. Montana Stop Overspending (2006)
11. Montana State Income Tax Increase, IR-112 (1994)
12. Montana University System Tax Levy, LR-118 (2008)
13. Montana Sales Tax Limit, C-27 (1994)
14. Montana Property Tax Determination, C-28 (1994)
15. Montana Voter Approval for Tax Increases, CI-66 (1994)
16. Montana Government Finance Restrictions, CI-67 (1994)
17. Montana Levy for Technical Education, LR-109 (June 1992)
18. Montana Tobacco Sales Tax Increase, I-115 (1990)
19. Montana Replace Taxes with Trade Charge, CI-55 (1990)
20. Montana Levy for Education, Referendum 1 (1914)
21. Montana Levy for University Maintenance, I-18 (1920)
22. Montana Mining Tax for Workmen's Compensation, I-28 (1924)
23. Montana Gasoline Tax for Roads, I-31 (1926)
24. Montana Levy for Public Schools, R-29 (1926)
25. Montana Levy for Agricultural and Extension Service, R-34 (1930)
26. Montana University of Montana Levy, R-42 (1940)
27. Montana University of Montana Levy, R-51 (1948)
28. Montana Gasoline Tax, I-55 (1952)
29. Montana Tobacco Tax, LR-64 (1966)
30. Montana Levy for University Support, R-65 (1968)
31. Montana Taxable Valuation of Personal Property, I-66 (1968)
32. Montana Methods of Taxation, R-68 (1971)
33. Montana Increase Tax Levy, Amendment 2 (1908)
34. Montana Increase Tax Levy, Amendment 1 (1910)
35. Montana Boards of Equalization, Amendment 1 (1916)
36. Montana Tax Exemption for Non-Profit Organizations, Amendment 2 (1916)
37. Montana Tax Exemption for Mortgages, Amendment 1 (1918)
38. Montana State Tax Commission, Amendment 3 (1920)
39. Montana Boards of Equalization, Amendment 1 (1922)
40. Montana Levy for Hail Insurance, Amendment 1(1926)
41. Montana Income Tax, Amendment 2 (1934)
42. Montana Personal Property Taxes, Amendment 1 (1948)
43. Montana Use of Highway Taxes, Amendment 1 (1956)
44. Montana Levy for Public Library Federations, R-70 (1976)
45. Montana Tax Relief for Homesteads, I-72 (1976)
46. Montana Returning Property Tax, CI-8 (1978)
47. Montana Levy to Support University System, LR-75 (1978)
48. Montana Change Income Tax Structure, I-86 (1980)
49. Montana Abolish Property Tax, CI-27 (1986)
50. Montana Limitation of Property Taxes, I-105 (1986)
51. Montana Levy for Montana University, LR-106 (1988)
52. Montana LR-128, Property Tax for State University System Measure (2018)

Recent news

The link below is to the most recent stories in a Google news search for the terms Montana taxes. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

See also

• Montana
• Montana state budget and finances
• Personal income tax
• Sales tax
• Corporate income tax
• Property tax

External links

• Tax Policy Center
• Federation of Tax Administrators
• Tax Foundation

Footnotes

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