US State Tax Summeries

Your Ultimate Guide to US Payroll in Montana

Managing payroll in Montana? Read our state-by-state guide to US payroll taxes to learn what you must withhold and deduct from employee wages.

Gabriele Culot
Written by Gabriele Culot
July 26, 2023
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Key takeaways

  1. Companies with employees in Montana will have to contribute to Montana’s state unemployment insurance.
  2. You’ll have to withhold state personal income taxes for employees working in Montana.
  3. When you hire one employee in Montana, you’ll need to start paying for workers’ compensation insurance in Montana.

Employers must navigate various regulations and requirements to ensure proper payroll withholding in each US state. On top of withholding federal taxes such as Medicare and Social Security taxes, you are also responsible for withholding and paying certain Montana state taxes from your employee’s payroll. These taxes together are referred to as employer payroll taxes or payroll withholding. 

This guide introduces what employers need to pay and withhold from payroll in Montana, including unemployment insurance, personal income tax, and workers' compensation.

Paying Unemployment Insurance 

Unemployment Insurance (UI) is a national program administered by the US Department of Labor and provides temporary payments to people who are unemployed through no fault of their own. Although UI is a joint state-federal program to help unemployed individuals, employers in Montana must contribute to state unemployment insurance.

You can manage your Montana unemployment insurance through an easy-to-use online portal. For more information on paying your unemployment insurance, the Montana Department of Labor and Industry provides extensive resources for employers.

Withholding Personal Income Tax from your Montana Employee 

Personal Income Tax, also known as individual income tax or state income tax, is a tax on the income of Montana residents. The tax is deducted from the employee’s wages and is withheld by the employer. After you withhold the tax from your employee, you are responsible for paying the amount you withheld to the state. You can pay the withheld amount through Montana’s online portal.

For more information on paying the withholding amount, the Montana Department of Revenue provides multiple resources for businesses.

Paying your Montana Workers’ Compensation 

On top of paying your Montana payroll taxes, you will also need to pay for workers’ compensation in the state. Workers’ compensation is insurance to provide care for an employee who gets injured while performing their job. Employers are required to pay for workers’ compensation in Montana even if you only have one employee living there.

Workers’ compensation is typically purchased from a qualified commercial carrier in the state. The Montana Department of Labor and Industry provides an overview of the workers’ compensation surcharges, and their website has plenty of contact information for experts in the department if you need help finding a qualified commercial carrier. 

Please be sure that you verify that your workers’ compensation insurance is compliant with the state’s regulations for workers’ compensation.

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Montana payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

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