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 state payroll taxes
How do Montana employers know how much tax state withholding tax to take out of employee paychecks?
There are three pieces of information employers need to calculate withholding tax:
- The employee’s gross pay
- The length of your payroll period
- Information on Form MW-4, Montana Employee’s Withholding Allowance and Exemption Certificate
You’ll want employees to complete Form MW-4 when they start working for your company. Although a new form isn’t required each year, it’s wise to have them review it annually for any changes.With these three bits of information, you’ll use Montana’s withholding tables to determine the withholding amount.
How often does withholding tax need to be paid to the state?
How often you’ll need to pay withholding tax depends on the amount of tax withheld in a year.
| Montana Withholding Tax Payment Schedule | |
| Amount withheld | Payment schedule |
| $1,199 or less | Annually: due by January 31 |
| $1,200 – $11,999 | Monthly: due by the 15th of the following month |
| $12,000 or more | Accelerated: follow your federal payment schedule |
New employers start paying monthly. If your payment schedule ever changes, the Montana Department of Revenue will notify you by November 1.
Montana encourages all employers to pay their tax online, but they do allow you to mail a check.
Employers also need to submit an annual summary report using Form MW-3, Montana Annual W-2 1099 Withholding Tax Reconciliation. You’ll also need to send copies of your:
- Federal Form W-2, Wage and Tax Statement, and
- Federal Form 1099s that have Montana state withholding
How does Montana calculate unemployment tax?
If you meet the state’s criteria, you’ll need to pay unemployment tax. Employers pay this tax. It’s not deducted from workers’ paychecks. Employers pay unemployment tax on the first $38,100 of each employee’s pay each year. New employers start off paying rates based on the average for their industry. Once you’ve established a history with the unemployment program, you’ll pay rates that range from 0% to 6.30%. Note that quarterly payments and wage reports are required even in quarters that you paid no wages or have no tax due.
What is the salary threshold in Montana?
Because the state of Montana doesn’t have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). 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.
When do new hires need to be reported to the state?
Employers have 20 days to report newly hired or rehired employees to Montana’s Child Support Division at DPHHS.
When do employers need to have Workers’ Compensation insurance in Montana?
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.
When an employee leaves, when are final paychecks due?
The deadline for final paychecks depends on whether the employee left voluntarily or not. If the employee resigns, you’ll have until the next regularly scheduled payday—but no later than 15 days after their last day of employment—to deliver their final wages. If a worker’s employment is terminated or they are laid off,final wages are due to them immediately.
Federal payroll taxes in Montana
In addition to Montana state taxes, you’re required to pay federal payroll taxes.
How is FICA tax calculated?
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
| FICA Tax | |
| Social Security tax | 6.2% on the first $147,000 of wages in 2022 |
| Medicare tax | 1.45% on all wages |
How do I calculate how much federal withholding tax to take out of my employees’ paychecks?
The amount of tax you’ll withhold from paychecks depends on information from Form W-4, Employee’s Withholding Certificate. Have employees complete it when they start working for you. Details like tax filing status, the number of dependents, and your employee’s pay affect how much tax you’ll take out. Using the federal withholding tables or payroll software, you can figure out the tax amount.
Do employers need to pay federal unemployment tax if they already pay state unemployment tax?
Yes. Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
How is the Additional Medicare tax calculated?
While not all employees will have to pay the Additional Medicare tax, as an employer, you’ll need to withhold it from any worker earning more than $200,000 per year. The 2022 tax rate for the Additional Medicare tax is 0.9% on wages over $200,000.
When are federal payroll taxes paid?
Like Montana’s state payroll taxes, how often you pay depends on how much tax you owe.
Federal withholding tax (also known as FICA) and Additional Medicare tax are usually paid monthly or semi-weekly—but some employers with large payrolls may need to pay the next business day.
Regardless of when you pay, quarterly summary reports on Form 941, Employer’s Quarterly Federal Tax Return, need to be submitted to the IRS.
Federal unemployment tax is generally paid annually, but if you owe more than $500, you’ll need to make quarterly payments. Each time you make a payment, you’ll send the IRS Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.
You made it! Congratulations. It’s a lot of information to absorb. If thinking about payroll taxes in this much detail isn’t how you prefer to spend your time, comprehensive payroll providers can take charge of your payroll. From tracking employee timesheets to filing payroll tax returns, payroll providers free up your time so you can focus on your business.
Disclaimer
The information provided by the Employer Tax Calculator is for general information and estimation. All of the taxes or fees that apply to your business may not be accounted for, or fully up to date. Gusto, Inc. (dba “Gusto”) does not promise or guarantee that the information in the Employer Tax Calculator is accurate or complete, and Gusto expressly disclaims all liability, loss or risk incurred by employers or employees as a direct result or an indirect consequence of its use. By using the Employer Tax Calculator, you waive any rights or claims you may have against Gusto in connection with its use.