Is military retirement pay taxed in Montana?
By a Navy veteran. Updated October 2026.
Partly
Montana: Guides disagree. One lists up to 50% deductible for the first five years, another lists it as fully exempt. Runway uses 50%. Federal income tax still applies to retired pay in every state.
Sources disagree for Montana. Published guides do not agree on this state’s rule, so treat the figure above as a planning estimate and confirm it with the Montana Department of Revenue before you decide.
What this means for your plan
Montana taxes part of military retired pay. The exclusion can depend on your age, your income or the year you served, and only the amount above the exclusion is taxed. Runway uses about 5.4% as a planning rate for the part that is taxed, and you can change it. Run your own numbers instead of assuming the full amount is taxed or exempt.
VA disability pay is not taxed by the federal government, and most states follow that treatment.
Local taxes in Montana
No local income tax that we know of. Confirm with your city or county.
Questions
Does Montana tax military retirement pay?
Partly. Guides disagree. One lists up to 50% deductible for the first five years, another lists it as fully exempt. Runway uses 50%.
Is VA disability pay taxed in Montana?
VA disability compensation is not taxed by the federal government, and most states follow that treatment. Confirm with the Montana Department of Revenue.
Where do I confirm the rules for Montana?
Use the Montana Department of Revenue and the DFAS retired pay tax page. Rules change, so check the current year before you decide where to live.
See it for your family
The free planner puts your retired pay, VA pay and Montana tax on one 24-month timeline, so you can see the month money gets tight. The States tab in the full version compares all 50 states and DC side by side.
Open the plannerSource and method
This summary comes from the state treatment data in the Runway planner, compiled from published state guides. It is not an official ruling. For the official rule, see the Montana Department of Revenue and the DFAS retired pay tax page.