How to Do Payroll in Montana

Last reviewed: July 2026

Montana payroll runs on the same federal rules every employer in the country follows, with a short list of state-specific steps layered on top. There's no local city tax to worry about and no separate short-term disability program to register for — just a state withholding account, an unemployment insurance account, and a set of deadlines. Here's the order that keeps you compliant from the first paycheck.

Step 1: Get Your Federal EIN

Every payroll starts with an Employer Identification Number from the IRS. It's free, it's issued immediately online, and you'll use it on every federal filing, most state registrations, and your business bank account. Apply at IRS.gov/EIN before you start any state paperwork; several Montana registrations ask for it on the first screen.

Step 2: Register With Montana Agencies

Montana employers need two state accounts. Register with the Montana Department of Revenue to withhold state income tax, and with the Montana Department of Labor and Industry's Unemployment Insurance Division to pay SUI. Both can be handled online, and both issue an employer account number you'll use on every return going forward.

From the Payroll Desk

Register before you hire, not after. Account numbers sometimes take a week or two to arrive, and you can't legally withhold or remit tax without one.

Step 3: Collect Form MW-4 and Withhold

Montana has its own withholding certificate: Form MW-4, the Montana Employee's Withholding Allowance and Exemption Certificate. New hires complete it alongside the federal W-4, and you use both together with the state's withholding tables to figure out how much to hold back from each check. If an employee doesn't submit an MW-4, withhold at the default rate the Department of Revenue publishes in its employer guide. Run the numbers through our W-4 helper if you want a second set of eyes on a tricky withholding situation.

Step 4: Register for and Pay SUI

State unemployment insurance is an employer-only tax in Montana — employees never see it deducted from their pay. For 2026, the taxable wage base is $47,300 per employee. New employers are assigned a rate by industry classification, typically 1.00% to 2.00% depending on the type of work, plus a flat 0.18% Administrative Fund Tax that every employer pays regardless of experience rating. Most non-construction new employers land close to 1.18% combined. See our Montana SUI Rates 2026 guide for the full rate table.

Step 5: Set Your Pay Frequency

Montana doesn't force employers into a specific pay schedule — weekly, biweekly, semimonthly, and monthly are all legal choices. What the law does require: if you never formally establish a pay period, semimonthly is presumed by default, and wages must reach employees within 10 business days after the end of whatever period you choose. Final pay rules are stricter. An employee who quits must be paid by the next scheduled payday or within 15 calendar days, whichever comes first. Someone laid off or fired is owed wages immediately, generally within four hours or by the end of the business day.

Step 6: Deposit and File on Schedule

Federal deposits follow the IRS's standard lookback schedule — most small employers land on a monthly deposit cadence, reported quarterly on Form 941. Montana withholding follows its own filing frequency assigned by the Department of Revenue based on how much you withhold, typically monthly or quarterly. SUI is reported and paid quarterly to the Department of Labor and Industry. Missing either state deadline draws penalties and interest on top of what you owe, so calendar both dates the moment your account numbers arrive.

Step 7: Close Out the Year

At year-end, issue W-2s to every employee and file copies with the Social Security Administration. On the state side, file Form MW-3, the Montana Annual W-2 1099 Withholding Tax Reconciliation, for as long as your withholding account stays open — even in a year with no wages paid. Keeping this filing current is what keeps your account in good standing for the following year.

Frequently Asked Questions

What's the first step to running payroll in Montana?

Get a federal EIN from the IRS, then register with the Montana Department of Revenue for withholding and the Montana Department of Labor and Industry for unemployment insurance. Do this before your first payroll run, since account numbers can take one to two weeks to arrive.

Does Montana require its own withholding certificate?

Yes. New employees fill out Form MW-4, the Montana Employee's Withholding Allowance and Exemption Certificate, in addition to the federal W-4. You use both forms together to calculate the correct paycheck withholding.

How often do Montana employers have to pay employees?

Montana law does not set a fixed pay frequency. If you never establish one, a semimonthly schedule is presumed by law, and wages must be paid within 10 business days after the end of each pay period.

What is Montana's SUI rate for a brand-new employer?

New employers pay a rate based on industry classification, generally 1.00% to 2.00% of the 2026 taxable wage base of $47,300, plus a 0.18% Administrative Fund Tax. Most non-construction employers land around 1.18% combined.

What do Montana employers file at year-end?

You issue federal W-2s to employees and file Form MW-3, the Montana Annual W-2 1099 Withholding Tax Reconciliation, with the Department of Revenue for every year your withholding account stays open.