Updated October 4, 2026. Quick answer: Yes. Montana’s Department of Revenue says taxpayers can “deduct eligible contributions to a Montana FESA or another state’s 529 plan”. The maximum deduction for 2026 is $4,600, or $9,200 for joint filers if both contribute.
What Montana allows for 529 contributions
| Item | What the documents say |
|---|---|
| Treatment | Deduction from adjusted gross income |
| Limit, 2025 | $4,500; $9,000 joint if both contribute or contributions come from joint funds |
| Limit, 2026 | $4,600; $9,200 joint, indexed to inflation |
| Plans that qualify | A Montana family education savings account or another state’s 529 plan; prepaid tuition plans do not qualify |
| Carryforward | None: the deduction is only available in the year the contribution is made |
| Not-qualified withdrawals | Recapture tax at the highest Montana income tax rate |
| Source | Montana Department of Revenue; MCA 15-62-207 and 15-62-208 |
A $10,000 contribution by a married couple
A married couple filing jointly who put $10,000 into a 529 account for one child can deduct $9,200 for 2026 if both contribute, the joint limit. The other $800 earns no deduction, and there is no carryforward.
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No carryforward and recapture
The Department says “The deduction is only available the year the contribution is made”. The recapture statute, MCA 15-62-208, sets a recapture tax at the highest Montana income tax rate, and the Department says the tax applies to non-qualified withdrawals and to withdrawals from an account opened within one year, to the extent deducted.
What changes in 2026
For tax year 2026 the maximum deduction is $4,600 ($9,200 joint), indexed from $4,500 ($9,000) for 2025 under House Bill 845.
Federal rules
A state break sits beside the federal rules for 529 plans: the statute is 26 U.S.C. 529 and the IRS explains it in Publication 970, Tax Benefits for Education.
Common mistakes
- Waiting to use a deduction later; the deduction is only available the year the contribution is made.
Related: how Montana taxes retirement income, whether Montana taxes pensions, the five questions behind any 529 state tax break, and the state-by-state table of 529 deductions.
Sources
- Family Education Savings Account (529 Plan) Deductions: https://revenuefiles.mt.gov/taxes/individual-income-tax/family-education-savings-account
- MCA 15-62-207 Deductions for contributions: https://mca.legmt.gov/bills/mca/title_0150/chapter_0620/part_0020/section_0070/0150-0620-0020-0070.html
- MCA 15-62-208 Tax on certain withdrawals of deductible contributions: https://mca.legmt.gov/bills/mca/title_0150/chapter_0620/part_0020/section_0080/0150-0620-0020-0080.html
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.