Withholding Taxes: Montana
Federal law and guidance on this subject should be reviewed together with this section.
Authors: Jason Ritchie and William Dabney, Holland & Hart LLP
- Wages paid to Montana residents who work in and outside the state are subject to withholding. An employee is a Montana resident for income tax purposes if certain criteria are met. Montana income tax must also be withheld from wages paid to Montana nonresident employees for services performed in the state. Special rules apply to withholding from Native Americans. See Withholding on Residents, Nonresidents and Expatriates.
- Montana employers determine withholding using federal Form W-4, Employee's Withholding Allowance Certificate. Starting in calendar year 2019, new employees and current employees who claim exemption from Montana income tax withholding must complete and submit Form MW-4, Montana Employee's Withholding and Exemption Certificate. See Employee's Withholding Allowance Certificate.
- Employers may withhold on supplemental wage payments, such as bonuses, as if the payments were a regular wage payment, or they may withhold a flat percentage. See Supplemental Wages.
- Each year employers must provide copies of federal Form W-2, Wage and Tax Statement, to each employee from whom any amount of Montana income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. See Form W-2 Reporting Requirements.
- All employers must keep accurate payroll records. See Recordkeeping Requirements.