Updated October 16, 2026. Quick answer: Only if you ask. Montana’s withholding guide says that on pension income “you may choose to pay estimated taxes on the amount”, or the payee can “have the remitter withhold a flat amount of taxes every distribution period”.
Montana pension withholding at a glance
| Item | What the documents say |
|---|---|
| Is state withholding required on regular pension payments? | No. Montana does not require withholding on pensions; you can ask the payer for a flat amount |
| Default rate if you give the payer no form | No default. The payee names a flat dollar amount on line 4 of Form MW-4 |
| Lump sum or one-time payment | The documents read give no separate lump-sum rule |
| Form to start, change or stop it | Form MW-4, given to the payer |
| Changed for 2026? | The 2026 Form MW-4 still lets a payee ask for a withholding amount from a pension, annuity or IRA; no rate change is stated |
What the Montana documents say
Montana’s Publication 1 says a payee who receives pension income may choose to pay estimated taxes, or ask the remitter to withhold a flat amount every distribution period. It adds: “The withholding can be changed or revoked at any time”.
The request is made on Form MW-4: on line 4 you enter the flat dollar amount, and Publication 1 says the remitter is not required to withhold if the amount is less than $10. The form says the payee can “ask the payer to withhold a flat amount that you report”.
The 2026 edition of the form is titled “2026 Montana Employee’s Withholding and Exemption Certificate”, and it still carries the pension, annuity and IRA withholding line.
What a mover should know
This page is about Montana as a state of residence. An instruction line written for a nonresident or part-year filer is not the rule for a resident, and none of the documents read settles a part-year or two-state case, so check each state’s own rule. The federal side is the same everywhere; CMG’s federal 20% withholding on a pension lump sum page covers it, state tax withholding on IRA and 401(k) withdrawals in Montana covers the account side, and state withholding on retirement withdrawals lists the other states checked.
What the documents do not say
- The documents read give no percentage default and no lump-sum rule, and state no rate change for 2026. The publication read is the 2025 edition.
Common mistakes
- Assuming the payer is withholding for the state because it withholds for the IRS: in a voluntary state nothing is withheld until you give the payer the state’s form.
- Assuming the answer for one state applies to another, or that state withholding settles the state tax owed at filing.
Related: state tax withholding on IRA and 401(k) withdrawals in Montana, Montana retirement taxes, whether Montana taxes pensions, state withholding on retirement withdrawals, and retirement withholding calculator.
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Answer againSources
- 2025 Montana Publication 1: A Guide to Montana Tax Withholding and Estimated Payments and Worksheets: https://revenuefiles.mt.gov/files/Forms/Prepaying_Income_Tax_Publication_1.pdf
- 2026 Montana Employee’s Withholding and Exemption Certificate (Form MW-4): https://revenuefiles.mt.gov/files/Forms/Montana_Employee_Withholding_Allowance_and_Exemption_Certificate_Form_MW-4.pdf
- IRS Tax Topic 413, Rollovers from retirement plans: https://www.irs.gov/taxtopics/tc413
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.