Updated October 5, 2026. Quick answer: Yes. Montana taxes trust income at 4.7% on ordinary income up to $21,100 and 5.9% above that for 2025, and the Montana Code states that a tax “is imposed on the fiduciaries or the beneficiaries of estates and trusts” in the same manner and to the same extent as federal income tax is imposed on them.
How Montana treats trust income
| Item | What the documents say |
|---|---|
| Treatment | Montana taxes estates and trusts through Form FID-3, and the fiduciary files the return even where the beneficiaries are the ones who pay the tax. In the source’s words, “is imposed on the fiduciaries or the beneficiaries of estates and trusts” under the same federal approach, as Section 15-30-2151 words it. |
| Who counts as a resident trust | The 2025 instructions use a sufficient connection test that weighs the creator’s domicile, trust property, beneficiary and trustee domicile, and place of administration. In the source’s words, “whether a trust has a sufficient connection to Montana” is the question the listed factors are meant to answer. |
| Rate on trust income | For 2025 the instructions print 4.7% on ordinary income up to $21,100 and 5.9% above that amount, with net long term capital gains taxed at 3% or 4.1%. The source says: “Estates and Trusts use the same rates and brackets as single individuals.” |
| Distribution deduction | The instructions heading for lines 2 through 5 refers to Montana adjustments to the income distribution deduction. In the source’s words, “Montana Adjustments to Income Distribution Deduction” and Schedule I column C reports the portion of an item included in beneficiary distributions. The documents read do not set out the deduction rule in statute text. |
| Nonresident trusts | A nonresident trust computes tax as if it were a resident trust, and that tax is then reduced by a Montana source income ratio. In the source’s words, “multiplied by the ratio of the estate’s or trust’s Montana source income” over the undistributed total income, as the 2025 instructions describe it. |
| Return to file | Resident trusts with a federal filing requirement or positive Montana taxable income file Form FID-3, and nonresident trusts file when they have Montana source income or Montana resident beneficiaries. Calendar year returns are due April 15. In the source’s words, “must file a Montana FID-3 if they have any Montana source income” or Montana resident beneficiaries. |
| Grantor trusts | A trust that is entirely a grantor trust completes only the heading of the form and marks the grantor type box, with the owners reporting the income on their own Montana returns. In the source’s words, “complete only the heading portion of the Form FID-3” and attach a statement showing the amounts, per the department page. |
A $10,000 example
The tax on $10,000 of taxable income a trust keeps depends on the bracket it lands in. Taxed wholly at the lowest printed rate, 4.7%, the tax is computed as $10,000 x 4.7% = $470; taxed wholly at the highest, 5.9%, it is computed as $10,000 x 5.9% = $590. The state’s own schedule decides which applies. Federal tax on the trust’s income still applies.
Income the trust passes out to a beneficiary is handled as the distribution deduction row above describes.
What changes in 2026
The Montana Code Annotated 2025 text of 15-30-2103 carries a temporary version ending December 31, 2026 that prints 4.7% up to $47,500 and 5.65% above for estates and trusts, and a version effective January 1, 2027 that prints 4.7% up to $65,000 and 5.4% above.
Federal rules
The state’s treatment sits on top of the federal one. The federal brackets a trust faces are laid out in trust tax brackets versus individual brackets, and capital gains that a trust keeps are covered in capital gains stay in the trust. The IRS explains the federal return in the About Form 1041 page.
Related: how Montana taxes retirement income, whether Montana taxes pensions, what a living trust costs in Montana, federal trust tax brackets, and trust income tax by state.
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Answer againSources
- 2025 Montana Form FID-3 Income Tax Instructions for Estates and Trusts (Montana Department of Revenue): https://revenue.mt.gov/files/Forms/Montana-Form-FID-3-Income-Tax-Instructions-for-Estates-and-Trusts/2025_Montana_Form_FID-3_Income_Tax_Instructions_for_Estates_and_Trusts.pdf
- Montana Estate and Trust Income Tax Filing Requirements (Montana Department of Revenue): https://revenuefiles.mt.gov/taxes/fiduciaries/estate-and-trust-filing-requirements
- MCA 15-30-2103 Rate of tax, net long-term capital gains, definitions (Montana Legislature): https://archive.legmt.gov/bills/mca/title_0150/chapter_0300/part_0210/section_0030/0150-0300-0210-0030.html
- MCA 15-30-2151 Tax on beneficiaries or fiduciaries of estates or trusts (Montana Legislature): https://archive.legmt.gov/bills/mca/title_0150/chapter_0300/part_0210/section_0510/0150-0300-0210-0510.html
Sources: the primary documents linked above, read on October 5, 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.