Montana employers must handle several payroll tax obligations: flat 4.7% state income tax withholding, SUI contributions (0.13%–6.30% on the first $43,000 per employee), plus all federal payroll taxes (FICA at 7.65%, FUTA at 0.6% on the first $7,000). New employers pay an SUI rate of 1.18%.
Table of Contents
Overview: Montana Payroll Tax Landscape
Running payroll in Montana means managing both state and federal tax obligations. Here is the complete picture of what Montana employers owe:
| Tax | Who Pays | Rate | Wage Base |
|---|---|---|---|
| Montana Income Tax | Employee (employer withholds) | flat 4.7% | All wages |
| Montana SUI | Employer | 0.13%–6.30% | $43,000 |
| Social Security (FICA) | Split 50/50 | 6.2% each | $176,100 |
| Medicare (FICA) | Split 50/50 | 1.45% each | No limit |
| FUTA | Employer | 0.6% (after credit) | $7,000 |
State Income Tax: flat 4.7%
Montana uses a flat income tax rate of 4.7% for all taxpayers. The state recently simplified its tax structure from a multi-bracket progressive system to this single flat rate.
As an employer, you are responsible for withholding Montana state income tax from every employee’s paycheck based on the withholding tables published by the Montana Department of Revenue. You must remit these withholdings on the schedule assigned by the state — typically monthly or quarterly depending on your total tax liability.
For details, visit the Montana Department of Revenue website.
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State Unemployment Insurance (SUI)
Montana SUI is an employer-paid tax on the first $43,000 of each employee’s wages per year. New employers pay 1.18%. Experienced employers are rated between 0.13%–6.30% based on their claims history.
SUI is administered by the Montana Department of Labor and Industry. You must register for an SUI account when you hire your first employee and file quarterly wage reports.
For a detailed breakdown, see our Montana SUI Rates 2026 guide.
Federal Payroll Taxes
On top of Montana state obligations, every employer must handle federal payroll taxes:
- FICA (Social Security + Medicare): 7.65% employer share, 7.65% employee share. Social Security applies to the first $176,100; Medicare has no cap.
- FUTA: 0.6% employer-only tax on the first $7,000 per employee (after state SUI credit).
- Federal Income Tax Withholding: Based on employee W-4 and IRS tables. Employer withholds but does not pay.
For a complete breakdown, see our Federal Payroll Tax Basics guide.
Filing Schedules and Deadlines
Key deadlines for Montana employers:
- Federal 941: Quarterly — due by the last day of the month after each quarter
- Federal 940 (FUTA): Annual — due January 31
- Montana SUI: Quarterly wage reports — due by the last day of the month after each quarter
- Montana Income Tax Withholding: Monthly or quarterly, based on your liability
- W-2s: Due to employees by January 31, filed with SSA by January 31
Penalties for Late Filing and Payment
Late or missed payroll tax payments result in penalties at both the federal and state level:
- IRS: Failure-to-deposit penalties range from 2% to 15% depending on how late
- Montana: State penalties vary but typically include interest on unpaid balances plus fixed or percentage-based penalty fees
- Trust fund penalty: The IRS can hold business owners personally liable for unpaid withholding taxes (the “Trust Fund Recovery Penalty”)
Frequently Asked Questions
What payroll taxes do Montana employers pay?
Montana employers pay federal payroll taxes (FICA, FUTA) and state unemployment insurance (SUI) on the first $43,000 of wages per employee. Employers also withhold Montana state income tax (flat 4.7%) from employee paychecks.
What is the Montana SUI wage base for 2026?
The Montana SUI wage base for 2026 is $43,000. Employers pay SUI on the first $43,000 of each employee's wages per year.
What is the new employer SUI rate in Montana?
New employers in Montana typically pay an SUI rate of 1.18%. Experienced employer rates range from 0.13%–6.30% based on claims history.
When are Montana payroll taxes due?
Montana SUI taxes are typically filed quarterly. State income tax withholding is remitted on the schedule assigned by the Montana Department of Revenue — monthly or quarterly based on liability. Check with the Montana Department of Revenue for current due dates.
Does Montana have local payroll taxes?
Some Montana municipalities may impose local taxes. Check with local authorities for specific requirements.
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of February 2026 and may not reflect recent changes in federal or Montana state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with Montana law before making payroll or compliance decisions for your business.