Montana payroll taxes for employers (2026)

Montana payroll: what sets it apart

Your starting UI rate depends on your industry class. Manufacturing, utilities and transportation, wholesale, retail and finance start at 1.00%. Services start at 1.10%, agriculture and mining at 1.30%, and construction and unclassified employers at 2.00%. Every new employer adds the 0.18% Administrative Fund Tax. Experienced employers in eligible rate classes 01 and 02 pay 0.13% instead. Experienced rates run from 0.00% to 6.12% before the AFT.

• Three ways to cover workers comp: any employer with an employee must choose Plan 1 (self-insured), Plan 2 (a private insurer) or Plan 3 (Montana State Fund) under MCA 39-71-401(1). Montana is not a monopolistic state; the State Fund competes with private carriers. Exemptions include household and casual work, sole proprietors and working partners or LLC members, and independent contractors with an exemption certificate.
• PEOs need a license from the Department of Labor and Industry PEO Program, which posts the licensed list on its site. Check it before you sign.
• No tip credit: the $10.85 minimum (businesses over $110,000 in gross sales) applies to tipped staff too. It rises to $11.20 on January 1, 2027. Non-FLSA businesses at or under $110,000 may pay $4.00.
• Fired means paid now: a discharged or laid-off worker is owed wages immediately, unless a written policy sets the next regular payday or 15 days, whichever is earlier. A worker who quits is paid by the next regular payday or within 15 days, whichever comes first (MCA 39-3-205).
• Withholding changed for 2026: the top rate fell from 5.9% to 5.65% under HB 337, the 4.7% rate covers up to $47,500 for single filers, and Montana withholding now uses the federal standard deduction instead of Montana allowances.

Montana has no state paid leave or disability payroll program.

Montana employer payroll facts at a glance

Montana employer cost for one $50,000 worker

The table uses the 1.00% class that covers most new businesses.

A services business at 1.10% plus AFT pays 1.28% x $47,300 = $605.44, for $4,472.44 in total. A construction or unclassified employer at 2.00% plus AFT pays 2.18% x $47,300 = $1,031.14, for $4,898.14. The 2026 SUTA table shows where that base ranks among the states.

Registering a Montana business as an employer

1. Get a federal EIN.
2. Set up your UI account through UI eServices for Employers (uieservices.mt.gov). The Employer Handbook lists the registration steps, and your industry class sets the starting rate.
3. Register for withholding with the Montana Department of Revenue and apply the 2026 rates using the federal standard deduction.
4. Report new hires and rehires within 20 days of the hire date to the Department of Public Health and Human Services.
5. Choose a workers comp plan: self-insure, buy from a private insurer, or buy from Montana State Fund.
6. Set a pay period. If you never establish one, the law presumes semimonthly.

Payroll providers and PEOs for Montana

Because the base is $47,300, a provider that stores the wrong industry class or forgets the AFT will misstate your tax on almost every dollar of pay. Check your first quarterly report against the rate notice. If you plan to use a PEO, confirm it appears on the state PEO license list.

Our payroll software rankings compare monthly prices, and the cost of payroll services lists add-on fees. For bundled workers comp and benefits, compare PEOs ranked by score. Hiring in Idaho or Wyoming as well? Each has its own base and rates.