Updated October 4, 2026. Quick answer: Yes, at lower rates than other income. The instructions say “Net long-term capital gains are taxed at two rates”: 3.0% on the first part and 4.1% above it, for a “capital asset held for more than one year”.
Selling your home? How the state taxes the profit, from its own tax documents: Does Montana tax the profit from selling your home?.
The same question for dividends and interest: does Montana tax dividends and interest.
How Montana treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Net long-term capital gain is taxed at its own two lower rates |
| Long-term gain rates, single, 2025 | 3.0% on the first $21,100 minus Montana ordinary income; 4.1% on the rest; if ordinary income exceeds $21,100, all long-term gain is taxed at 4.1% |
| Ordinary income, single, 2025 | 4.7% on the first $21,100; 5.9% above |
| Where it is written | MCA 15-30-2103 and the 2025 Form 2 instructions |
A $50,000 long-term gain
If other Montana ordinary income already exceeds $21,100, the whole $50,000 gain is taxed at 4.1%: computed as $50,000 x 4.1% = $2,050.
If the gain were the only income and no deductions applied, the first $21,100 is taxed at 3.0% and the rest at 4.1%: computed as $21,100 x 3.0% + ($50,000 minus $21,100) x 4.1% = $1,817.90.
What changes in 2026
The Department’s HB 337 page says “The rates on long-term capital gains remain at 3.0% and 4.1%” for 2026, while ordinary rates become 4.7% up to $47,500 and 5.65% above for a single filer, and the long-term brackets move with them.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether Montana taxes pensions, how Montana taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- 2025 Montana Tax Tables and Deductions: https://revenue.mt.gov/taxes/tax-tables-and-deductions/2025
- 2025 Montana Individual Income Tax Return Form 2 Instructions: https://revenue.mt.gov/files/forms/Montana-Individual-Income-Tax-Return-Form-2-Instructions/2025_Montana_Individual_Income_Tax_Return_Form_2_Instructions.pdf
- MCA 15-30-2103 Rate of tax: net long-term capital gains: definitions (MCA 2025): https://leg.mt.gov/bills/mca/title_0150/chapter_0300/part_0210/section_0030/0150-0300-0210-0030.html
- HB337: 2026-2027 Montana Individual Income Tax Changes: https://revenue.mt.gov/news/recent-news/HB-337
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.