Montana Salary Paycheck and Payroll Calculator

Montana Salary Paycheck Calculator

Starting a small business in Big Sky country? Or are you preparing to hire your first Montana employee? Congratulations! Those are no small feats. Running a small business means you’ll likely need to hire employees at some point. We know the thought of payroll taxes might make you dizzy with confusing deadlines, tax rates, and tax forms. We’re here to help by answering the most common questions business owners have about Montana payroll taxes. And if you need more information, contact a payroll professional who has years of experience navigating payroll waters.

Montana payroll taxes

Here’s what you need to know about withholding payroll taxes in Montana.

• Montana payroll taxes start with employees filling out Form MW-4. This information helps you determine how much you should withhold. 
• If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.
• Employees need to update Form MW-4 in case of life events (such as marriage, divorce, birth or adoption of a child, etc.) that may impact their taxes.
• The personal income tax rate in Montana is 1%–6.75%.
• Montana has reciprocity with North Dakota.

Additional Montana forms

In addition to Form MW-4 mentioned above, Montana employers also need to file the following forms:

1. Montana Withholding Payment Coupon (MT MW-1)*
2. Montana Annual W/H Reconciliation (MT MW-3)
3. Montana Quarterly Contribution (SUI) (MT UI-5)
4. Wage and Tax Statement (State W2)
5. MT New Hire Report

Montana unemployment tax rate

Montana requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own. 

• Employers pay Montana unemployment tax on the first $40,500 of an employee’s wages.
• New employers who are not in the construction industry pay at a rate of 1.18%.
• Experienced employers pay at a rate of 0%–9.18%.
• Unemployment tax in Montana should be paid quarterly to the Montana Department of Labor and Industry.

Paying Montana taxes

Here’s what you need to know about paying Montana taxes:

• How often employers pay depends on the amount of tax you witheld in a year. 
• Montana’s payment frequencies are: annually, monthly, and accelerated. 

Montana salary threshold

Because Montana doesn’t have its own salary threshold, it adheres to the federal salary threshold.

• The federal salary threshold is now $684 per week on a salary basis or on an hourly basis at a rate not less than $27.63 an hour.
• The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%).
• Employees who earn at least $107,432 per year may qualify as “highly compensated.”
• See this Department of Labor fact sheet for details.

Workers’ Compensation

Requirements to obtain Workers’ Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information. 

New hires

Employers in Montana need to report new employees.

• New hires must be reported to Montana New Hire Reporting Center.
• New hires must be reported within 20 days of their first day of work. 

Payroll stubs

You must provide a pay stub to every employee that includes:

1. Company’s legal name and address
2. Employee’s name and last four digits of their Social Security number
3. Pay period beginning and end dates
4. Total hours worked
5. Rate of pay
6. Gross wages
7. The amount and reason for any deduction

Final paychecks

Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.

• Your company is allowed to pay dismissed employees on the company’s regular payday if you have a written policy indicating that this is when final paychecks will be provided. If your company doesn’t have that policy in writing, you’re required to pay the employee within 4 hours or by the end of the employee’s last day—whichever is sooner.

Time off

Montana law requires employers to provide the following types of time off to employees.

• Family & parental leave applies to all employers for maternity leave.

Federal payroll taxes

In addition to Montana-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt. 
• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.
• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

FICA

Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.

• FICA is made up of the Medicare tax and the Social Security tax. 
• In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $2,600. 
• The Medicare tax requires employers and employees to each contribute 1.45% of all wages. 
• See the IRS webpage for details, like maximum thresholds.

FUTA

Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.

• FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages. 
• The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.
• Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly. 

Additional Medicare tax

The Additional Medicare tax is paid by employees. Here’s what you should know:

• For employees that earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax. 
• Whether or not your employee owes this tax may depend on their filing status.

Paying federal taxes

How often you’ll pay federal payroll taxes depends on how much you owe.

• Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.
• Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

We’re here to help

If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.