Montana Sales Tax Guide

Montana does not have a state sales tax. It also does not have a local sales tax. However, it does have several other taxes it collects, including an alcohol tax, mineral royalty withholding, and tobacco tax. To make up for not having a sales tax, Montana collects individual income taxes from its residents.

Types of taxes

Instead of relying on a sales tax rate, Montana levies other types of taxes plus an income tax on its resident taxpayers. Certain industries, such as lodging, might have more than one tax. In other cases, local jurisdictions might charge a tax on top of the state tax.

Lodging

Montana levies two lodging taxes plus a Tourism Business Improvement District Fee. All local jurisdictions must collect and pay the two lodging taxes, but only certain areas must pay the Tourism Business Improvement District Fee.

The taxes include a 4 percent Lodging Facility Use Tax and a 4 percent Lodging Sales Tax. Lodging businesses collect these fees from the customer and remit them to the Montana Department of Revenue. The taxes do not apply to meal charges, entertainment, or transportation – only the use of the facility for lodging.

The Lodging Facility Use Tax goes into the state special revenue fund, which is primarily used by the Department of Commerce to promote tourism. Seventy-five percent of the Lodging Sales Tax goes to the General Fund. The 25-percent balance goes to a special fund for the Montana Heritage Center for historic preservation.

Some local resort areas also charge a Resort and Local Option Tax on top of the Lodging Facility Use Tax and the Lodging Sales Tax. The communities generally have populations of less than 5,500. Each of these districts must petition and elect the tax.

The current resort tax communities include:

• Whitefish
• Red Lodge
• Virginia City
• West Yellowstone
• Big Sky
• Craig
• Cooke City
• Gardiner
• St. Regis
• Wolf Creek

The Tourism Business Improvement District fee is $0.75 per occupied room night for hotels and other types of lodging with six or more rooms. The only cities that collect the Tourism Business Improvement District fee are:

• Billings
• Butte Silver Bow
• Gallatin Valley (Bozeman)
• Glasgow
• Glendive
• Great Falls
• Havre
• Helena
• Kalispell
• Lewistown
• Livingston
• Miles City
• Missoula
• Ravalli County
• Red Lodge
• Shelby
• Sidney
• Thoreau
• West Yellowstone

For example, a hotel in an area that collects all taxes must collect the 4-percent Lodging Facility Use Tax, plus the 4-percent Lodging Sales Tax, the Tourism Business Improvement District Fee of $0.75, and the Resort and Local Option Tax.

To figure the tax on a room that costs $100 per night for one night, add the two state taxes together for 8 percent. Add the local tax – let’s use 3 percent for this example. That is a total of 11 percent. Multiply .11 by 100 for $11. Now add the Tourism Business Improvement District Fee of $0.75 for a total of $11.75. The total the business charges the customer for a $100 room is $111.75.

Vehicle rentals

Montana charges a vehicle rental sales tax of 4 percent. Businesses that rent vehicles for less than 30 days and without a driver must charge the sales tax on vehicles that transport 15 or fewer passengers and that are rented as part of an insurance or warranty contract.

Federal government officials are exempt from the tax if the bill is paid for by the federal government, but state, county, and local government representatives are not exempt.

Rental vehicle businesses must apply for a seller’s permit using a tax form or by using the TransAction Portal (TAP).

Third-party platforms and peer-to-peer rentals such as Uber and Lyft must also charge the 4-percent tax.

The sales tax applies to:

• Time of use
• Mileage
• Personal accident insurance
• Additional drivers
• Underage drivers
• Accessory equipment, including luggage racks, child safety seats, and GPS units

Charges that are exempt from the tax include:

• Vehicle discounts
• Airport terminal operation fees
• Fuel
• Intercity vehicle drop charges
• Other taxes imposed by local, state, and federal governments

Thus, if a four-day rental is $75 per day including mileage, multiply 4 by 75 to get $300. Multiply 300 by .04 to get the tax rate of $12. The total due is $312.

Marijuana excise tax

Montana imposes a tax on medical marijuana and adult-use marijuana. Retailers must charge 4 percent for medical marijuana and 20 percent for adult-use sales.

Additionally, local jurisdictions may also charge a tax of up to 3 percent on medical and adult-use marijuana. The local taxes are in addition to the state excise tax. For example, if a person buys adult-use marijuana and his county charges 3 percent, the total tax on the sale is 23 percent. Thus, the customer that buys $100 in marijuana pays $123.

Businesses selling marijuana pay the marijuana excise tax through the TransAction Portal.

Tobacco tax

Montana pre-collects taxes on cigarettes by selling a tax decal to cigarette wholesalers. Wholesalers can order the tax stamps through the TransAction Portal.

• The taxes are 8.5 cents per cigarette, which equates to $1.70 for a pack of 20 cigarettes.
• Moist snuff has a tax of $0.85 per ounce. Wholesalers receive a 1.5 percent allowance on tax returns.
• All other tobacco products are subject to a tax equal to 50 percent of the wholesale price. Wholesalers receive a 1.5 percent allowance on tobacco sales tax returns.

Food and beverage tax

Montana does not have a separate food and beverage tax.

Liquor tax

Breweries pay a tax on the beer they sell to retailers and consumers. The tax is based on the total number of barrels the brewery brews in a fiscal year (July 1 through June 30). The rates are as follows:

• Up to 5,000 barrels: $1.30 per barrel
• 5,001 to 10,000 barrels: $2.30 per barrel
• 10,001 or more barrels: $4.30 per barrel

Tax due dates are on the 15th of each month. Thus, if a brewer brews 10 barrels in January, the tax on those barrels ($1.30 times 10) is due on February 15. When the brewer exceeds a production increment, it increases the tax to the next increment.

For example, if a brewer averages 1,100 barrels per month, during January, February, March, April, and May, the brewer pays $1.30 per barrel. In June, it starts paying $2.30 per barrel. The next year, the tax starts over again at the lowest increment rate.

Distilleries must pay an excise tax on products sold in tasting rooms. There is no tax on products sold to the state for distribution in agency liquor stores. The distillery taxes are as follows:

• Less than 50,000 proof gallons: 2 percent license tax
• 50,001 through 200,000 proof gallons: 8.6 percent license tax
• Over 200,000 proof gallons: 10 percent license tax
• Less than 20,000 proof gallons: 3 percent distillery excise tax
• 20,000 to 50,000 proof gallons: 8 percent distillery excise tax
• 50,001 to 200,000 proof gallons: 13.8 percent distillery excise tax
• Over 200,000 proof gallons: 10 percent distillery excise tax

Wine has a separate tax:

• For sales made to retailers and consumers: $0.27 per liter
• Agency liquor stores: $0.28 per liter
• Sacramental wine licensees: $0.27 per liter

Registering for and filing Montana’s taxes

Register to pay taxes due by following the online prompts. Once you register for the site, the business creates the appropriate tax account. It can also apply for licenses through its account.

Montana sales tax holiday

Every day is a sales tax holiday in Montana since it does not levy a sales and use tax.

Montana sales tax exemptions

Businesses do not need an exemption certificate since Montana does not have a sales and use tax.

Remote and marketplace sellers

Businesses from out of state do not have to collect sales tax from Montana residents since the state does not have a sales and use tax.

FAQs

What is the Montana sales tax for 2022?

Montana does not have a sales and use tax, thus there is no reason to file a sales tax return or a use tax return.

How do I get a sales tax exemption certificate?

Businesses in Montana do not need a resale certificate because the state does not have a retail sales tax for sales of tangible personal property. However, businesses located in the state can complete an exemption certificate to produce to retailers and wholesalers in other states if needed.

If my business sells goods out-of-state, do I have to collect that state’s taxes?

Yes. You must collect the other state’s taxes and file tax returns with the state unless the state has thresholds that you do not meet. Check with each state’s Department of Revenue to determine whether you should collect taxes for other states.

Does Montana have a list of tax forms?

Yes. You can find tax forms on the Montana Department of Revenue’s website.

Does Montana offer tax credits?

Yes. Montana offers several tax credits, including an allowance for paying, filing tax returns, and remitting payments on time.

Does a business owner have to take alcohol training to sell beer and liquor?

Yes. Within 60 days of being hired or opening a new business, those who sell liquor must take the alcohol training course. They must also renew their training every three years.

What is an agency liquor store?

Any privately owned liquor store in a contract with Montana to sell wine, distilled spirits to the public is an agency liquor store.