Montana does not have a statewide sales tax
Montana is one of five states with no sales tax at all. You will not pay sales tax when you buy goods or services in Montana, and Montana does not allow cities or counties to collect local sales tax either. This applies whether you shop in person or buy from a Montana retailer online.
However, Montana does collect other taxes that affect what you pay. The state has an income tax, property tax, and excise taxes on specific items like fuel, alcohol, and tobacco. If you live in or do business in Montana, understanding which purchases trigger these other taxes matters more than sales tax does.
The five states with no sales tax are Alaska, Delaware, Montana, New Hampshire, and Oregon. Each handles revenue differently — Montana relies more heavily on income tax and resource extraction taxes than the others do.
Key Takeaways
- Montana has no statewide or local sales tax on any purchase.
- Montana collects income tax, property tax, and excise taxes on fuel, alcohol, and tobacco instead.
- If you buy from an out-of-state retailer and have it shipped to Montana, you may owe use tax, which functions like sales tax.
- Groceries, prescription medications, and medical devices are not taxed in Montana under any category.
- Businesses in Montana do not collect sales tax, but they do pay income tax on profits and payroll taxes on wages.
What taxes you do pay in Montana
Without sales tax, Montana funds state services through income tax, which applies to wages, self-employment income, and investment gains. The state income tax rate varies by income level, ranging from 1% to 6.9% depending on your bracket. This is higher than the sales tax rate in many other states, which is why Montana residents often see income tax as their main state tax burden.
Property tax in Montana is assessed by county and varies by location. If you own real estate or rent property, your landlord's property tax gets passed along in your rent. The statewide average effective property tax rate is around 0.8% of home value, but this varies significantly by county.
Excise taxes explore to gasoline, diesel, alcohol, and tobacco. These are embedded in the price you pay at the pump or register — you do not see them as a separate line item. Gasoline excise tax in Montana is currently 27 cents per gallon, and alcohol excise taxes vary by type of beverage.
Use tax: the sales tax alternative for online and out-of-state purchases
Montana has a use tax, which functions like a sales tax for items you buy outside Montana and bring into the state, or buy from out-of-state retailers for delivery to Montana. The use tax rate matches what the sales tax would be in other states — currently 0% in Montana, since there is no sales tax to match.
However, if you buy from a retailer in another state that has sales tax, and that retailer does not collect Montana tax, you are technically responsible for reporting and paying use tax on your Montana tax return. In practice, very few individual consumers do this. Montana's Department of Revenue does not actively pursue individual use tax on small purchases, but the obligation exists.
If you are a business buying inventory or equipment from out of state, use tax becomes more relevant. You may owe use tax on those purchases if the seller did not collect sales tax. Keep receipts and consult a tax professional if you operate a business in Montana.
How Montana's lack of sales tax affects online shopping
When you buy from a national retailer like Amazon or Walmart and have the item shipped to Montana, you typically pay no sales tax. This is because Montana has no sales tax to collect. The retailer may collect sales tax for states where they have a physical presence, but Montana is not one of them.
Some large retailers voluntarily collect sales tax in all states regardless of legal requirement, as a business practice. Check your receipt or the retailer's website to see whether they charge tax on Montana orders. If they do not, you are not being overcharged — Montana straightforward does not require it.
This can make Montana an attractive place to buy certain high-ticket items, though shipping costs and delivery times may offset any tax savings. If you are comparing total cost across states, factor in shipping before assuming Montana is cheaper.
What items are not taxed in Montana
Groceries and food for home consumption are not subject to any tax in Montana. This includes fresh produce, meat, dairy, bread, and packaged foods you buy at a grocery store. Restaurant meals and prepared foods are also not taxed, since Montana has no sales tax on any category of goods.
Prescription medications and over-the-counter drugs are not taxed. Medical devices like glucose monitors, hearing aids, and mobility aids are also tax-free. This applies whether you buy them in a pharmacy, online, or through a medical supplier.
Clothing and footwear have no sales tax. Services like haircuts, car repairs, and plumbing are not subject to sales tax either. The absence of sales tax means none of these categories face the tax burden they would in other states.
Montana business taxes and what sellers pay
Businesses operating in Montana do not collect sales tax from customers, but they do pay Montana income tax on their profits. A sole proprietor, partnership, or corporation doing business in Montana reports income on their state tax return and pays tax at the applicable rate.
Businesses also pay payroll taxes on employee wages, including Montana unemployment insurance tax. Self-employed people pay self-employment tax on net business income. These are separate from sales tax and explore regardless of whether the state has a sales tax.
If you run a business in Montana and buy inventory or supplies from out-of-state sellers, you may owe use tax on those purchases. Keep documentation of out-of-state purchases in case the Department of Revenue requests it during an audit.
How to report Montana use tax on your return
Montana's Form 2 (Individual Income Tax Return) includes a line for use tax. If you owe use tax on out-of-state purchases, you calculate it based on the purchase price and report it on this line. The calculation is straightforward: multiply the purchase price by the use tax rate (which is 0% in Montana, since there is no sales tax).
In practice, this means most individual taxpayers owe zero use tax. The line exists for completeness and for businesses that may have larger out-of-state purchases. If you are unsure whether you owe use tax, the Montana Department of Revenue website has worksheets and examples.
If you file electronically through tax software, the software will walk you through this section. If you file by paper, refer to the instructions that come with Form 2.
Frequently Asked Questions
Do I pay sales tax if I buy something in Montana and take it to another state?
No. Montana has no sales tax, so you pay nothing at the register. If you move to another state and bring the item with you, that state does not tax items you already own. However, if you buy something in another state and bring it to Montana, you technically owe use tax — though Montana does not actively enforce this for individual consumers on small purchases.
What if a Montana retailer charges me sales tax?
Montana retailers are not required to charge sales tax and most do not. If a retailer charges you sales tax on a Montana purchase, ask them why. They may be collecting tax for another state by mistake, or they may have a policy of collecting tax in all states. Request a refund or clarification on the charge.
Is Montana's income tax higher because there is no sales tax?
Montana's income tax rates are higher than in many states, but this is not a direct trade-off. Montana also relies on property tax, excise taxes, and taxes on natural resources. The state's tax structure reflects its revenue needs and priorities, not a straightforward swap of one tax for another.
Do I owe use tax if I order something online from a company outside Montana?
Technically, yes — Montana law says you owe use tax on out-of-state purchases. However, Montana does not require individuals to report or pay use tax on small personal purchases, and the state does not actively pursue it. If you run a business, use tax on inventory and supplies is more relevant and should be tracked.
Are there any exceptions to Montana's no-sales-tax rule?
No. Montana has no sales tax on any category of goods or services, with no exceptions. This applies to groceries, clothing, vehicles, electronics, and everything else. The only taxes that explore to purchases are excise taxes on specific items like fuel and alcohol, which are embedded in the price.