Complete Guide to Montana LLC Taxes in 2025
Montana occupies a unique position in American taxation: it is one of only five states with no state sales tax. Combined with graduated income tax brackets ranging from 1% to 6.75% and a minimal $20 annual report fee, Big Sky Country offers a distinctive tax environment for LLC owners. This guide covers everything you need to know about Montana LLC taxes, including the benefits of the zero sales tax and how the graduated brackets affect your LLC income.
How Montana Taxes LLCs
Montana treats LLCs as pass-through entities. The LLC itself does not pay Montana income tax. Instead, profits pass through to individual members who report their share on Montana Form 2 (Individual Income Tax Return).
For a single-member LLC, income flows to Schedule C of the federal return and then to Montana Form 2. For a multi-member LLC, the LLC files Montana Form PR-1 (Partnership Return) as an informational return.
Montana does not impose a franchise tax, entity-level tax, or gross receipts tax on pass-through LLCs. Combined with the absence of sales tax, Montana LLC owners face a simpler compliance landscape than many other states.
Key Point: Montana's standout feature is its zero sales tax rate. If your LLC sells goods or services, you never need to worry about collecting, remitting, or reporting sales tax in Montana. This simplifies operations enormously and gives Montana-based LLCs a pricing advantage for direct-to-consumer sales.
Montana Income Tax Brackets (2025)
| Taxable Income | Rate |
|---|---|
| $0 - $3,600 | 1.00% |
| $3,601 - $6,500 | 2.00% |
| $6,501 - $9,900 | 3.00% |
| $9,901 - $13,500 | 4.00% |
| $13,501 - $17,400 | 5.00% |
| $17,401 - $22,200 | 6.00% |
| Over $22,200 | 6.75% |
Montana LLC Annual Filing Requirements
- Annual Report: $20 fee, due April 15, filed with the Secretary of State
- State Tax Returns: Form 2 (individual) or Form PR-1 (partnership)
- Estimated Tax Payments: Required if expecting to owe $500 or more
- Sales Tax: Not applicable -- Montana has no sales tax
- Business Equipment Tax: Personal property used in business may be subject to local taxation
Sales Tax Advantage: Montana is one of only five US states with no sales tax (along with Alaska, Delaware, New Hampshire, and Oregon). This means your LLC never needs to register for, collect, or remit sales tax on Montana transactions. This is a massive compliance simplification.
Montana's No Sales Tax Benefit
The absence of sales tax in Montana creates several advantages for LLC owners:
- No compliance burden: No registration, collection, remittance, or reporting of sales tax
- Pricing advantage: Products and services are effectively 5-10% cheaper for consumers compared to high-sales-tax states
- E-commerce simplification: While you may still need to collect sales tax for shipments to other states (economic nexus), Montana sales are always tax-free
- No audit risk: No sales tax means no sales tax audits from the state
Montana LLC vs. Other States
| State | Income Tax | Annual Fee | Sales Tax |
|---|---|---|---|
| Montana | 1-6.75% | $20 | 0% |
| Wyoming | 0% | $60 | 4% |
| Oregon | 4.75-9.9% | $100 | 0% |
| Idaho | 5.695% flat | $0 | 6% |
| South Dakota | 0% | $50 | 4.5% |
| North Dakota | 0-2.5% | $50 | 5% |
Montana Estimated Tax Schedule
- Q1: April 15, 2025
- Q2: June 15, 2025
- Q3: September 15, 2025
- Q4: January 15, 2026
Montana LLC Formation Costs
- Articles of Organization: $70 with the Secretary of State
- Registered Agent: Required; member or professional service ($50-200/year)
- EIN: Free from the IRS
- Annual Report: $20/year
Total first-year cost: approximately $120-270. Ongoing annual cost: $20 (annual report) plus registered agent fees if applicable.
Montana Tax Deductions
- Standard deduction: Montana uses its own standard deduction ($5,540 single, approximately $12,000 MFJ for 2025)
- Half of SE tax: Deductible
- Health insurance: Self-employed deduction available
- Retirement contributions: Fully deductible
- Capital gains credit: Montana offers a partial capital gains credit for gains on certain Montana assets
Common Montana LLC Tax Mistakes
- Assuming no sales tax means no tax obligations in other states: Economic nexus rules may still require collecting sales tax for shipments to other states
- Overlooking the business equipment tax: Local jurisdictions may tax personal property used in business
- Underestimating the 6.75% top rate: Montana's top bracket kicks in at just $22,200, affecting most profitable LLCs
- Missing the $500 estimated payment threshold: Underpayment penalties apply
Montana Resources
- Montana Department of Revenue: mtrevenue.gov -- tax forms, payments, guidance
- Secretary of State: sosmt.gov -- business filings, annual reports
- Revenue Customer Service: (406) 444-6900