Does Montana tax military retirement pay?
Partly taxed
Partly. Montana's Working Military Retirement Exemption lets certain resident military retirees who also have income from a job, a business or a farm subtract a portion of their benefits. Residents receiving military survivor benefits can too.
In the state's own words
Copied word for word from the official document linked below each quote:
“Certain resident military retirees that receive income from working a job, owning a business, or operating a farm, as well as residents receiving military survivor benefits may subtract a portion of their benefits from taxable income.”
Other retirement income in Montana
Yes. Montana starts from federal taxable income, so pensions that are taxed federally are taxed by Montana. People 65 and older get a $5,500 subtraction. The Montana pension page has the details, and the Montana Social Security page covers Social Security. Yes, in part. Montana starts from federal taxable income, so the Social Security that is taxed on your federal return is also taxed by Montana. People 65 and older get a separate $5,500 subtraction.
Before you file or move
This page is about state income tax only. Your federal return has its own rules for military retired pay, and VA disability compensation is a separate benefit from retired pay. State rules change, and the details (age, years, which kinds of pay qualify, survivor benefits) matter. Check with the Montana Department of Revenue before you file or move.
Other states in the same group
Check our work
The answer above comes from this document. Follow the link and compare.
- Montana Tax Simplification Resource HubMontana Department of Revenue. Read on November 13, 2026.