Montana Capital Gains Tax Rate (2026)
Montana capital gains tax overview
Montana has a capital gains credit equal to 2% of net capital gains, effectively reducing the rate by about 2 percentage points for many taxpayers.
Federal + Montana combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what a Montana investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Montana State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 5.65% | 5.65% | 9.4% |
| 15% | 5.65% | 20.6% | 24.5% |
| 20% | 5.65% | 25.6% | 29.5% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Montana does not have an equivalent.
How Montana compares to other states
Montana's top rate of 5.65% places it in the lower-middle tier of state capital gains taxation. For comparison:
- Zero-tax states (FL, TX, NV, etc.): 0% — total with 15% federal = 15%
- Low-rate states (AZ, IN, PA): 2.5–3.1% — total with 15% federal = 17.5–18.1%
- Montana: 5.65% — total with 15% federal = 20.6%
- High-rate states (NY, NJ): 10.75–10.9% — total with 15% federal = ~26%
- California: 13.3% — total with 15% federal = 28.3%
Tax-reduction strategies for Montana residents
With a top state rate of 5.65%, minimizing capital gains tax is particularly important in Montana. Key strategies:
- Hold over 1 year for long-term federal rates (0/15/20%).
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving up to 26% ($5,130) on that $20,000 at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. You still owe Montana state tax, but eliminating the federal component is significant.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
- Installment sales: If selling a business or real estate, structuring as an installment sale spreads the gain over multiple years, potentially keeping each year's gain in a lower bracket.
Frequently asked questions — Montana
Does Montana tax short-term and long-term gains differently?
Yes, Montana provides some preferential treatment for long-term capital gains. Montana has a capital gains credit equal to 2% of net capital gains, effectively reducing the rate by about 2 percentage points for many taxpayers.
Do I need to file a Montana tax return if I only have capital gains?
If you have capital gains income and meet Montana's filing threshold, you are required to file a Montana state income tax return. The threshold is typically similar to the standard deduction amount — check the MT Department of Revenue for the current year's filing requirements.
What if I moved to Montana mid-year?
If you moved to Montana during the year, you are a part-year resident. Montana generally taxes capital gains realized while you were a Montana resident. Gains realized before you moved may be taxable by your prior state. Keep detailed records of when each sale occurred relative to your move date.