Key figures
Montana payroll
2026, with sources
Payroll taxes
Montana payroll carries state income tax withholding, unemployment insurance and the Administrative Fund Tax, and workers’ compensation. There is no state paid leave premium and no local payroll tax. New employers pay UI at their industry’s average — 1.10% for services in 2026 — plus 0.18% AFT, on the first $47,300 of each employee’s wages.
Example: a Delaware software startup hires an engineer in Bozeman at $140,000. Its 2026 UI and AFT cost is 1.28% of $47,300, about $605. Montana income tax is withheld from the engineer’s pay, the hire is reported within 20 days, and workers’ comp must be in place before the start date.
Wage and separation rules
Montana’s minimum wage is indexed to inflation and rose from $10.55 to $10.85 on January 1, 2026. The rule that most shapes HR, though, is the Wrongful Discharge from Employment Act: a written probationary period and written personnel policies matter more here than anywhere else.
- Minimum wage $10.85 in 2026, adjusted every year; no tip credit.
- Overtime after 40 hours a week.
- Final pay immediately on a discharge for cause or layoff unless a written policy says otherwise.
- After probation (12 months by default), discharge requires good cause.
Deadlines
- Within 20 days of hire or rehireNew and rehired employeesNew hire report
- QuarterlyUnemployment insurance contributions and AFTUI quarterly report
The federal baseline
This page covers what Montana adds. The federal rules underneath it apply here too.
Common questions
When is a final paycheck due in Montana?
When an employee quits, by the earlier of the next regular payday or 15 days. When the employer discharges for cause or lays someone off, immediately — unless the employer has a written personnel policy that extends it to the next regular payday or 15 days, whichever is first.
What UI rate does a new Montana employer pay?
New employers are assigned the average rate of their industry: 1.10% for services and 1.00% for most other classifications in 2026, plus the 0.18% Administrative Fund Tax, on the first $47,300 of each employee’s wages.
Payroll next door
- IDIdaho payrollIdaho payroll is lean: 5.3% flat withholding, a 1.000% standard UI rate on $58,300, workers’ comp from employee one, the federal minimum wage and no paid leave premiums.
- NDNorth Dakota payrollLow graduated withholding, UI on a $46,600 wage base at 1.00% for most new employers, the federal minimum wage, and workers’ compensation only through the state fund, WSI.
- SDSouth Dakota payrollNo state withholding and no paid leave program. A new employer pays 1.20% Reemployment Assistance tax plus a 0.55% investment fee on the first $15,000 of wages.
- WYWyoming payrollWyoming payroll has no income tax withholding: UI on the first $33,800 at an industry rate, state-fund workers’ comp for extra-hazardous industries, and final pay on the next payday.
How Montana compares
- No tax on wagesStates with no state income tax on wagesMontana: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programMontana: no state program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesMontana: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- RunwayBurn rate and runway: how to calculate them correctlyGross burn, net burn and months of runway, done the way an investor checks them: from cash, averaged, and with the hires you’ve already committed to.
More of the Montana guide
- AccountingAccounting and state tax in MontanaCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MontanaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in MontanaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in MontanaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in MontanaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.