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 Montana’s old partial pension exemption was repealed starting tax year 2024, so public, private, federal and IRA/401(k) income are now all fully taxable except for a general age-65 subtraction that applies to any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.
More on public pension systems, topic by topic: Montana PERS early retirement, Montana PERS disability retirement and Montana PERS working after retirement.
More state retirement-income schedules, line by line: Montana Form 2 retirement lines.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Montana tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Montana tax 403(b) and 457(b) withdrawals.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Montana tax withholding on pension payments.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Montana a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Montana tax the profit from selling your home?.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Montana tax withholding on IRA and 401(k) withdrawals.
Trusts have their own page: does Montana tax trust income.
Dividends and interest have their own page: does Montana tax dividends and interest.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Montana have an inheritance tax?.
Annuity payments have their own page: does Montana tax annuity income.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Montana have an estate tax?.
Military retired pay has its own page: does Montana tax military retirement.
Saving for a child’s college? The state’s 529 break has its own page: Montana 529 plan tax deduction.
Selling stocks, funds or real estate has its own page: does Montana tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Montana tax 401(k) and IRA withdrawals.
The Montana TRS payment options and refund rules, from the system’s own pages and statute: Montana TRS retirement decisions.
The Montana PERS payment options and refund rules, from the system’s own handbook: Montana PERS retirement decisions.
More on Montana: Montana Executor Bond Requirement, What Adult Guardianship Costs in Montana and IRA Creditor Protection in Montana.
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). |
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How our partner relationships workSocial 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.
Figures verified against MCA 15-30-2120 (2025 MCA), the Montana Department of Revenue Form WMRE page and the 2025 Form 2 instructions on September 30, 2026; the effective date of the repeal of MCA 15-30-2110 was not re-checked.
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.