Montana taxes capital gains at 5.9%. Combined with federal taxes, your effective rate on a home sale could reach 24.7%.
MT State Rate
5.9%
Top marginal rate; 2% credit available
Federal Rate
15%
Most common long-term bracket
Combined Effective
24.7%
On $150K taxable gain (example)
After the $250K/$500K exclusion, here's what a typical seller might owe.
If Montana is where your primary residence is located and you've lived there at least 2 of the last 5 years, you can exclude up to $250K (single) or $500K (married filing jointly) of your capital gain from both federal and state taxes.
Investment and rental properties in Montana don't qualify for the exclusion. You'll owe 5.9% state tax plus federal tax on the full gain, plus 25% depreciation recapture on any depreciation claimed.
In Montana, homes sold in January sell for 8% more than those sold in July (-9%). Timing your sale right can offset a significant portion of your tax bill.
Capital gains tax rates on home sales in Montana and nearby states.
| State | Rate | Tax on $150K Gain | Notes |
|---|---|---|---|
| 0% | $0 | No state income tax | |
Wyoming0% | 0% | $0 | No state income tax |
| 1.95% | $2,925 | Top marginal rate | |
| 5.695% | $8,543 | Flat tax rate | |
MontanaYou | 5.9% | $8,850 | Top marginal rate; 2% credit available |
Selling in South Dakota instead of Montana would save $8,850 in state tax on a $150K gain.
Montana taxes capital gains up to 5.9% but offers a 2% capital gains credit, effectively reducing the rate for qualifying gains. This credit is notable and can save significant amounts.
Bozeman, Missoula, and the Flathead Valley have seen extreme appreciation driven by remote workers and lifestyle migrants. Many sellers face gains well above the exclusion.
Montana has no sales tax, which combined with the capital gains credit makes the overall tax environment competitive.
The state's resort and ranch property market can involve very high-value transactions where the 2% credit and careful tax planning are essential.
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