Does Montana tax pensions and retirement income?
Taxed, with narrow exceptions
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.
In the state's own words
Copied word for word from the official document linked below each quote:
“There is a standard subtraction for taxpayers 65 and older of $5,500.”
And 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. The Montana Social Security page quotes the rule.
Federal tax still applies
Whatever Montana does, pensions, annuities and traditional IRA or 401(k) withdrawals are generally taxable on your federal return. See the federal tax brackets and, if you are 73 or older, the required minimum distribution calculator.
State rules change, and the details (age limits, income limits, which plans qualify) 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 12, 2026.