Does Montana tax Social Security? Yes, as far as your federal return does
Yes. Montana's income tax starts from federal taxable income, so whatever part of your Social Security the federal return taxes, Montana taxes too. What Montana gives instead is a flat subtraction for taxpayers 65 or older: $5,660 each for 2025 ($11,320 for a couple), adjusted for inflation every year. The 2026 rates are 4.7% up to $47,500 of taxable income ($95,000 joint) and 5.65% above.
The rule, in Montana's words
The 2025 Form 2 instructions: “Taxpayers 65 and older receive a $5,660 subtraction from federal taxable income.” and “This amount is adjusted annually for inflation.” There is no separate Social Security line: the benefits arrive already counted in federal taxable income.
What Social Security adds to your Montana tax in 2026
Each row compares Montana's 2026 income tax with your Social Security and without it, for the same IRA or 401(k) withdrawals. The difference is what your benefits cost you in Montana tax, through every rule at once. For the single example, the extra tax starts once IRA withdrawals pass about $24,000, the point where the federal return starts taxing benefits after the deductions; for the couple, about $40,000.
| IRA or 401(k) withdrawals | Federal AGI | Montana tax, 2026 | Same, without Social Security | Extra because of Social Security |
|---|---|---|---|---|
| $0 | $0 | $0 | $0 | $0 |
| $10,000 | $10,000 | $0 | $0 | $0 |
| $20,000 | $23,500 | $0 | $0 | $0 |
| $30,000 | $41,300 | $540 | $9 | $531 |
| $40,000 | $59,800 | $1,410 | $479 | $931 |
| $50,000 | $70,400 | $1,908 | $949 | $959 |
| $60,000 | $80,400 | $2,425 | $1,419 | $1,006 |
| $80,000 | $100,400 | $3,623 | $2,401 | $1,222 |
| $100,000 | $120,400 | $4,821 | $3,599 | $1,222 |
| $125,000 | $145,400 | $6,318 | $5,096 | $1,222 |
| $150,000 | $170,400 | $7,815 | $6,594 | $1,222 |
| IRA or 401(k) withdrawals | Federal AGI | Montana tax, 2026 | Same, without Social Security | Extra because of Social Security |
|---|---|---|---|---|
| $0 | $0 | $0 | $0 | $0 |
| $10,000 | $10,000 | $0 | $0 | $0 |
| $20,000 | $24,000 | $0 | $0 | $0 |
| $30,000 | $41,100 | $0 | $0 | $0 |
| $40,000 | $59,600 | $37 | $0 | $37 |
| $50,000 | $78,100 | $906 | $0 | $906 |
| $60,000 | $94,000 | $1,653 | $55 | $1,598 |
| $80,000 | $114,000 | $2,593 | $995 | $1,598 |
| $100,000 | $134,000 | $3,533 | $1,935 | $1,598 |
| $125,000 | $159,000 | $4,788 | $3,110 | $1,678 |
| $150,000 | $184,000 | $6,285 | $4,285 | $2,000 |
Computed with the same engine and figures as our eight-state tool: federal taxable Social Security from IRS Publication 915, the 2026 federal standard deduction including the extra amount at 65 and the senior deduction, and Montana's rules above. No other income, itemized deductions or credits. 2026 rates from House Bill 337 (2025): 4.7% up to $47,500 single / $95,000 joint and 5.65% above. The subtraction for taxpayers 65 or older is set by the Department of Revenue by November 1 of the tax year; the 2025 amount of $5,660 is used until then.
Your numbers
Social Security disability benefits
Disability benefits are taxed like retirement benefits, as far as the federal return taxes them: “Social security benefits include monthly retirement, survivor, and disability benefits.” The $5,660 subtraction is for age 65 and older only.
Pensions and IRA withdrawals
Pensions and IRA withdrawals are taxed as part of federal taxable income, with no separate Montana pension exclusion.
2027
For 2027 the 4.7% bracket widens to $65,000 ($130,000 joint) and the top rate falls to 5.4% (House Bill 337). The 2026 subtraction for 65 and older is set by November 1, 2026; this page uses the 2025 amount until then.
The other states that tax Social Security
Colorado, Connecticut, Minnesota, New Mexico, Rhode Island, Utah, Vermont. All eight side by side are in the eight-state tool, and every state with its own instructions in the all-states tool. How much of your Social Security the federal return taxes is in our taxable Social Security calculator.
Rechecks and changes
- . First published.
Sources
- Montana Department of Revenue, 2025 Form 2 instructions (line 6)
- Montana Department of Revenue, HB337: 2026-2027 Montana Individual Income Tax Changes
- IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits
- Dollars Ahead, Retirement Tax by State (the eight-state tool and its test cases)
This page shows what published tax rules do to the example incomes. It is not tax, legal or financial advice. For a decision that matters, take your numbers to a professional licensed to advise you.