Hiring your first employee in Montana

What do you have to register for before your first payroll?

There is no single Montana business registration. Hiring one person in Montana means four separate sign-ups with four separate logins: a wage withholding account with the Department of Revenue through the TransAction Portal at tap.dor.mt.gov, an unemployment insurance account with the Department of Labor and Industry at uieservices.mt.gov, a workers compensation policy bought from Montana State Fund or a private insurer, and new hire reporting to the Child Support Services Division inside the Department of Public Health and Human Services. Montana also has no statewide general business license, so there is no fifth licence step, and the Secretary of State registration is about your entity rather than your payroll. Get your federal EIN first, because both tax registrations ask for it.

Does Montana require income tax withholding?

Yes. You register with the Montana Department of Revenue, before your first montana payroll. montana publishes no deadline in days, so the first paycheck is the real cut-off.

Montana taxes wages for services performed in the state, and the Department's own employer guide says plainly that having no physical presence does not get you out of it: an out-of-state company with someone working remotely in Montana can pick up withholding, filing and payment duties. Three exemptions matter more than the rest. First, a genuine thirty day rule: you need not withhold for a nonresident who worked in Montana fewer than 30 days and also worked in another state, but it is voided if the person works only in Montana, works more than 30 days, is a construction worker, a professional athlete, an entertainer, paid per event, or a key employee earning over $500,000 in the prior year. Second, North Dakota residents are covered by a reciprocity agreement and are not taxed on Montana wages at all, provided the employee files Form MW-4 line 5. Third, agricultural labourers carry no Montana withholding duty, though cannabis workers are expressly not agricultural labourers. Every new employee completes Form MW-4, and employers submit new or updated MW-4s through the portal by the last day of the payroll period in which they were handed in. How often you pay is set by a lookback: $12,000 or more withheld puts you on the accelerated federal schedule, $1,200 to $11,999 is monthly on the 15th of the following month, and $1,199 or less is annual on 31 January. Whatever the payment schedule, Form MW-3 and the W-2s are always due 31 January. House Bill 337 of 2025 cut the top individual rate and widened the brackets for 2026 and again for 2027, so the withholding tables move two years running.

What unemployment insurance does Montana charge a new employer?

Montana does not publish one new employer rate, so the figure depends on your industry. No single new employer rate is published here because Montana does not have one. A new employer, meaning one with a positive reserve and less than three full federal fiscal years of experience, is assigned the average rate of its industry, and for 2026 those ten published rates are 1.30 percent for agriculture, forestry, hunting and fishing, 1.30 percent for mining, 2.00 percent for construction, 1.00 percent for manufacturing, 1.00 percent for utilities, transportation and warehousing, 1.00 percent for wholesale trade, 1.00 percent for retail trade, 1.00 percent for finance, insurance and real estate, 1.10 percent for services, and 2.00 percent for unclassified establishments. Add the Administrative Fund Tax of 0.18 percent on top, which every experience rated employer pays, so a new construction employer is really at 2.18 percent and a new retailer at 1.18 percent. Tax applies to the first $47,300 of each employee's wages in 2026, which is 80 percent of the 2024 Montana average annual wage of $59,106.64 rounded to the nearest $100, and it is recalculated every January. Montana sits in rate Schedule 1 for 2026, the cheapest of twelve schedules, so experience rated employers run from 0.00 percent to 6.12 percent and over 7,200 employers were given a zero rate. Two things catch employers out. The liability trigger is very low: total annual payroll of $1,000 or more in the current or preceding calendar year makes you a covered employer, and once you cross it you owe tax retroactively to 1 January of that year and for the whole of the next year regardless of payroll. And a penalty rate, 50 percent higher than your assigned rate, is applied to any employer with unfiled reports or unpaid tax when rates are calculated in December. Employees contribute nothing and the handbook states it is against the law to deduct unemployment insurance tax from their wages. Quarterly reports are due 30 April, 31 July, 31 October and 31 January, and employers who reported 20 or more employees in any quarter of the prior year must file electronically.

Do you need workers compensation insurance in Montana?

Yes, from your first employee. Montana sets no headcount to reach, so there is no free window before coverage is required.

• any employer with any employee in service under an appointment or contract of hire, expressed or implied, oral or written, per 39-71-401 MCA
• construction contractors with employees, who must also register as a construction contractor with the Department of Labor and Industry

There is no free headcount. Section 39-71-401 MCA says the Workers' Compensation Act applies to all employers and to all employees, and an employer with any employee under a contract of hire must elect to be bound by compensation plan No. 1, 2 or 3. Plan 1 is self insurance and is realistic only for very large companies, Plan 2 is a private insurer, and Plan 3 is Montana State Fund. That third option is the part worth understanding, because Montana runs a competitive state fund rather than a monopoly one. Section 39-71-2313 MCA creates the state fund as a nonprofit independent public corporation and requires it to insure any employer in the state that asks, with the single exception of an employer whose principals have defaulted on a state fund obligation that is still unpaid. So Montana is a guaranteed market: you cannot be turned away for being new, small, seasonal or high hazard, and there is no assigned risk pool to fall into. You can still shop the private market on price. Going uninsured is expensive: the Uninsured Employers Fund can assess double the premium you would have paid, with a minimum of $200, and it pays the injured worker's benefits and then comes after you. Section 39-71-401(2) exempts a long list, including household or domestic employment, casual employment, a dependent family member you can claim under the Internal Revenue Code, sole proprietors and working members of partnerships and member-managed LLCs, commission-only real estate, securities and insurance salespeople with no guaranteed minimum, and corporate officers or manager-managed LLC managers who own 10 percent or more. Note there is no dollar threshold on the household exemption, unlike most states. Naming someone an independent contractor does not work by itself: the exemption at 39-71-401(2)(x) is for a person working under an Independent Contractor Exemption Certificate issued by the department under 39-71-417 MCA, which costs $125, lasts two years and must be applied for by the contractor, not by you. Two Montana specific traps. An out-of-state employer sending people in temporarily may qualify for extraterritorial coverage for up to six months under reciprocal agreements with North Dakota, South Dakota, Oregon, Idaho, Washington, Wyoming and Utah, but the request must be approved before work starts, and construction is excluded except for contractors from Wyoming, Idaho, South Dakota and Utah, so a construction firm from anywhere else must buy a Montana policy. And every employer must post a departmental sign at the workplace stating its current coverage, with a $50 fine per citation for purposely or knowingly failing to do so. Separately, all construction contractors with employees must register as a construction contractor with the Department of Labor and Industry; that programme moved to a new licensing system on 1 January 2026 when the old Title 39 chapter 9 was repealed, so confirm the current fee with the department rather than relying on an older form.

How quickly must you report a new hire in Montana?

Within 20 days of the date the employee is hired or rehired, or twice monthly between 12 and 16 days apart if you report electronically. Reports go to the Montana Child Support Services Division, Department of Public Health and Human Services.

Section 40-5-922 MCA and federal law at 42 USC 653(a) require every new hire and rehire to be reported within 20 days, whether or not the person has a child support obligation, and even if they quit or are terminated before you got around to reporting them. A rehire only counts again after a break of 60 days or more, so a seasonal layoff or unpaid leave shorter than that is not a new report. Two Montana quirks are worth knowing. Its statutory definition of employee is a person 18 years of age or older, which is narrower than most states. And unlike Oregon, independent contractors are not reportable here: the guide says that if the work is under a contract rather than an employment relationship you do not report, and the contractor reports its own employees instead. Everything you need is on the W-4. Reports go to the Child Support Services Division rather than to Revenue or Labor, through the online system using an OKTA Montana login or the state File Transfer Service, and the division tells employers in capitals not to email new hire reports. A multistate employer that reports electronically may designate one state for all its reports by notifying the federal Secretary of Health and Human Services.

Does Montana have paid family leave or state disability insurance?

No. Montana runs no state paid family leave fund and no state disability insurance, so there is no payroll deduction of that kind and no extra account to open.

Montana runs no state disability insurance fund and no paid family and medical leave programme, so there is no payroll deduction and no employer contribution to budget for, and no third state agency to register with. There is also no statewide paid sick leave mandate. What does exist is the Montana Maternity Leave Act, which is an unfunded obligation on you rather than a premium you remit: an employee is entitled to a reasonable leave of absence for the temporary disabilities associated with childbirth, delivery and related medical conditions, and may use any disability benefits, sick leave, vacation, annual leave or compensatory time she has accrued. If you maintain no such plans, the leave is unpaid. Leave for fathers and for parents of adopted children is not required by Montana law for private employers, though the federal Family and Medical Leave Act may still apply.

Do you need a sales tax permit in Montana?

Montana has no general sales tax, so there is no sales tax permit to apply for. That does not always mean nothing to register for, as the note explains.

Montana has no general sales tax, so there is no permit to apply for, no rate to charge, no return to file and, as the Department puts it, no sales tax exemption certificate either. An out-of-state seller shipping goods into Montana registers for nothing and collects nothing. Three narrow taxes survive and they are the reason this is not simply a blank entry. Lodging is taxed twice, a 4 percent lodging facility use tax plus a 4 percent lodging facility sales tax for a combined 8 percent, and it reaches hotels, motels, campgrounds, resorts, guest and dude ranches, hostels, bed and breakfasts and vacation rentals of a home, apartment, timeshare or single room; every accommodation required to collect must apply for a seller's permit before doing business, and online hosting platforms and short-term rental marketplaces must register and collect as sellers of accommodations in their own right. Renting out vehicles carries a 4 percent rental vehicle tax on base rental charges for cars, motorcycles, motorboats, sailboats and off-highway vehicles rented for under 30 days without an operator, and third-party platforms must hold a seller's permit and remit it too; farm equipment, travel trailers, motor homes, aeroplanes, snowmobiles and golf carts are outside it. Finally, about a dozen small tourist communities including Red Lodge, West Yellowstone, Whitefish and Big Sky levy a local resort tax of up to 3 percent on lodging, restaurants, bars, destination recreation and luxury goods; the Department of Revenue does not administer it, so you deal with the town, not the state. No fee is published for the lodging or rental vehicle seller's permit, so none is recorded here. Running the other way, a Montana business buying from vendors in sales tax states can hand over the Montana Business Registry Resale Certificate, which vendors may accept but are not obliged to.

Does a marketplace like Amazon or Etsy handle the tax for you?

A marketplace facilitator law exists to shift the duty to collect a sales tax onto the platform, and Montana has no general sales tax to collect, so Amazon, Etsy and eBay remit nothing to Montana on your behalf and you pick up no Montana filing duty from marketplace sales of goods. Do not generalise that to lodging or vehicle rental. Montana does impose a platform collection duty in those two corners: online hosting platforms and short-term rental marketplaces must register for a seller's permit and collect the 8 percent lodging taxes as sellers of accommodations, and third-party rental vehicle platforms must do the same for the 4 percent rental vehicle tax. So a host listing a Montana cabin on a booking site and a peer-to-peer car rental host are in a genuine facilitator regime, while a Montana merchant selling physical goods online is in none.

If your sales drop, when can you stop collecting?

There is no sales tax registration and no economic nexus threshold in Montana, so nothing trails after you stop selling into the state. The equivalent loose end sits elsewhere. A withholding account and an unemployment insurance account both stay open until you tell the agency you have stopped, and Montana requires Form MW-3 and the W-2s within 30 days of your cease date rather than at the usual January deadline. If you hold a lodging or rental vehicle seller's permit, that has to be closed too.

Does Montana charge a tax on revenue rather than profit?

Montana is the rare no sales tax state that did not replace it with a tax on revenue. There is no Montana equivalent of Delaware's gross receipts tax, Washington's business and occupation tax, Ohio's commercial activity tax, Nevada's commerce tax or Oregon's corporate activity tax, so a low margin or loss making business is not taxed on turnover here. What Montana taxes instead is profit: a C corporation doing business in Montana files Form CIT and pays 6.75 percent, or 7 percent under a water's edge election, with a $50 minimum tax that is owed even in a loss year. There is one provision a remote seller should know about, because it behaves like a gross receipts tax and is easy to miss. A corporation whose only Montana activity is sales, which owns no real or tangible property in the state, and whose Montana gross sales are $100,000 or less, may elect an alternative rate of 0.5 percent charged on those gross sales rather than on income. That is a simplification for small out-of-state sellers, not an extra tax.

Do you have to register your out-of-state company in Montana?

$70 for a foreign LLC Certificate of Authority, plus $50 for each series member named in a series LLC, and $70 for a foreign profit corporation, which Montana now calls a Foreign Registration Statement rather than a certificate of authority. A foreign nonprofit corporation is $20 and a foreign limited partnership only $10. Amending either filing later is $15. Montana adds no franchise tax and no initial report, so the $70 is genuinely the whole entry cost, which makes it one of the cheapest states to qualify into.

The ongoing cost is where Montana currently looks unusual. Every LLC and corporation, domestic or foreign, must file an annual report by 15 April to stay active. The printed fee schedule on the Secretary of State's site is dated 7-1-2022 and still shows $20 for a report filed before 15 April, but the live fee table and the Secretary's own announcements show that fee waived, and 2026 is the third consecutive year of the waiver, applied automatically to reports filed between 1 January and 15 April. Treat the waiver as an annual discretionary decision rather than a permanent change in the law: it can lapse, and the $35 late fee for filing after 15 April has never been waived. You also need a Montana registered agent with a street address in the state. One point worth checking before assuming you can skip this step: the list at 35-14-1505 MCA of activities that do not amount to doing business in Montana covers things like defending a lawsuit, holding board meetings, keeping bank accounts, selling through independent contractors, soliciting orders that are accepted outside the state, and isolated transactions completed within 30 days. Having employees in Montana is not on that list, so a single remote worker in Bozeman generally does put an out-of-state company into the registration requirement. Registering with the Secretary of State opens no tax account: withholding, unemployment insurance and workers compensation are all separate and none of them accept your Secretary of State filing number.

Where these figures come from

Every number on this page was read on Montana's own agency pages, its statute, or a current-year official form, and this record was last reviewed on 2026-09-08. Where a state's explainer page disagreed with its statute or its current form, we followed the statute or the form and said so in the relevant section, because a state's consumer-facing pages are often the last thing updated when a figure changes.

Anything we could not confirm on a primary source is left blank rather than estimated. A missing figure on this page means we could not verify it, not that it is zero.

This is general information, not legal or tax advice. Rules change and your circumstances matter. Confirm anything you are about to act on with the agency named beside it.