Updated September 4, 2026. Quick answer: Yes, as of a substantial 2024 rule change. Montana’s old partial pension exemption was repealed starting tax year 2024, so public, private, federal and IRA/401(k) income are now all fully taxable except for a general age-65 subtraction that applies to any income, not just retirement income. Military retirement pay gets a narrower, income-conditioned exemption, not a full one.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Montana taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Fully taxable as of tax year 2024 onward. The prior pension exclusion was repealed and its replacement statute has no pension-specific line item. |
|---|---|
| Private (employer) pensions | Fully taxable, same as public pensions, under the same current statute. |
| Federal government pensions (FERS/CSRS) | Fully taxable, identical treatment to public and private pensions; current law draws no distinction by source. |
| Military retirement pay | Partially exempt only, not fully exempt, contrary to a common assumption. The subtraction is capped at the lesser of the taxpayer’s Montana-source wage income or 50% of military retirement income, and requires the retiree to also have Montana wage, business, or farm income, claimable for up to 5 consecutive years. Survivor benefits get a cleaner 50% exemption not tied to wage income. |
| IRA and 401(k)/403(b) distributions | Fully taxable, same as pensions, with no line item in current law. |
| General retirement-income exclusion | A general age-65 subtraction, not specific to retirement income, currently $5,660 for 2025 (statutory base $5,500, adjusted annually). |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Social Security is never taxed by Montana. Social Security has its own rules in every state; see the full breakdown in how Montana taxes retirement income generally.
Statute and sources
Governing citation: MCA 15-30-2120 (current law); MCA 15-30-2110 (former pension exclusion, repealed effective tax year 2024).
- Montana Code Annotated 15-30-2120
- Montana Dept. of Revenue, Withholding for Military Retirement guidance
Read September 4, 2026.
Related: how Montana taxes retirement income generally · does Montana tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.