Montana — Corporate Income / Franchise Tax

Montana imposes a corporate income tax on corporations engaged in business in the state. A corporation must file a Montana Corporate Income Tax Return (Form CIT) and pay tax annually for the privilege of carrying on business in Montana.

Source: Mont. Code Ann. § 15-31-101(3)

Source: Montana Department of Revenue – Corporate Income Tax

## Corporations Covered

The term "corporation" is broadly defined. It includes associations, joint-stock companies, common-law trusts, business trusts that do business in an organized capacity, and all corporations created or organized under the laws of any state, country, or the United States. The definition also extends to any limited liability company, limited liability partnership, partnership, or other entity that is treated as an association for federal income tax purposes and that is not a disregarded entity.

Source: Mont. Code Ann. § 15-31-101(1)

Financial institutions are expressly covered. Every bank organized under Montana, another state, or federal law, and every savings and loan association organized under Montana or federal law, is subject to the Montana corporate income tax.

Source: Mont. Code Ann. § 15-31-101(4)

## Engaged in Business Standard

The terms "engaged in business" and "doing business" both mean actively engaging in any transaction for the purpose of financial or pecuniary gain or profit. Montana follows an economic presence income tax nexus standard; a corporation is subject to tax if it is engaged in business activity in the state, unless it qualifies for a specific exemption.

Source: Mont. Code Ann. § 15-31-101(2)

## S Corporations and Pass-Through Entities

If a corporation makes a Subchapter S election at the federal level, it must also file as an S Corporation in Montana using the Montana Pass-Through Entity Tax Return (Form PTE), not Form CIT. C corporations doing business in Montana file Form CIT.

Source: Montana Department of Revenue – Corporate Income Tax

## Exemptions

Corporations may qualify for tax-exempt status granted by the Montana Department of Revenue. Entities seeking exemption must submit a Tax-Exempt Status Request Form for Income Taxes. Even tax-exempt entities with unrelated business taxable income subject to Montana taxation must file a corporate income tax return and include a copy of their federal exempt organization business income tax return.

Source: Montana Department of Revenue – Tax-Exempt Entities

Mont. Code Ann. § 15-31-103 also provides specific exemptions, but the details of those exemptions are beyond the scope of this introductory section.

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Not yet human confirmed as of 2026-05-26.

Montana imposes a flat corporate income tax rate of 6.75% on all net income for the tax period. Corporations making a water's-edge election pay a 7% rate instead. Every corporation subject to the tax must pay a minimum tax of $50.

Source: Mont. Code Ann. § 15-31-121

Montana follows an economic presence standard for corporate income tax nexus with no specific dollar or transaction threshold. Under Mont. Code Ann. § 15-31-101(2), the terms "engaged in business" and "doing business" both mean "actively engaging in any transaction for the purpose of financial or pecuniary gain or profit." Any corporation meeting this definition is subject to Montana corporate income tax unless protected by Public Law 86-272.

Public Law 86-272 shields out-of-state corporations from income tax if their only in-state activity is solicitation of orders for sales of tangible personal property, where orders are approved and filled from outside Montana. This protection does not apply to sales of services, intangible property, or any activity beyond pure solicitation.

Source: Mont. Code Ann. § 15-31-101(2)

Source: Montana Department of Revenue – Nexus

Montana permits corporations with unitary affiliates to make a water’s-edge election, which limits the members included in the Montana combined group and directly affects Montana’s apportionment calculations.

Election Mechanics and Duration Under Mont. Code Ann. § 15-31-324, a water’s-edge election must be made by attaching the prescribed form to the corporate income tax return for the first year the election is to be effective. The election is binding for a three-year period and can only be revoked or changed with written approval from the Department of Revenue. Express consent is required from each affiliated corporation subject to Montana tax, but this is achieved by the common parent or designated agent acting for the group. The electing taxpayer must disclose on each tax return the names of corporations included in the water’s-edge group. Source: Mont. Code Ann. § 15-31-324

Which Affiliates Are Included The scope of the water’s-edge combined group is governed by Mont. Code Ann. § 15-31-322. The law requires inclusion of:

• Any U.S. corporation (ownership by a common parent of more than 50% of voting stock) eligible to join a federal consolidated return, provided more than 20% of its average payroll and property values are assigned to locations within the United States.
• Any Domestic International Sales Corporation, foreign sales corporation, or export trade corporation as defined by the Internal Revenue Code, whether or not it meets the 20% U.S. connection test.
• Any corporation (domestic or foreign) with income from U.S. real property interests under IRC § 897.
• Any foreign corporation if more than 50% of its voting stock is owned, directly or indirectly, by a U.S. member of the water’s-edge group and more than 20% of its payroll and property are assigned to the U.S.

The statute includes detailed subparts and exceptions; if an affiliate is not described in § 15-31-322, it is generally excluded from the Montana water’s-edge group, but the Department may make discretionary adjustments in certain cases. Source: Mont. Code Ann. § 15-31-322

Effect on Apportionment Formula Montana’s apportionment is then performed using only the property, payroll, and receipts of the corporations included in the water’s-edge group, both for the Montana numerator and the everywhere denominator. Montana Admin. R. 42.26.309 prescribes that the only corporations to be included in the apportionment factors are those listed on the group’s return. If intercompany transactions or eliminations would otherwise distort income allocation, Montana Admin. R. 42.26.310 allows the Department to restore intercompany transactions or adjust allocations to properly reflect activity in the state; this applies both for transfer pricing and to ensure factor representation is not manipulated by group composition. Source: Montana Admin. R. 42.26.309 Source: Montana Admin. R. 42.26.310

Key Caveats and Department Authority Section 15-31-322 lists additional exceptions and the Department may, on a showing of tax avoidance or improper reflection of activity, include or exclude specific affiliates, restore intercompany transactions, or otherwise adjust the group make-up and apportionment methodology under ARM 42.26.310. These statutory and regulatory provisions are controlling; practitioners should review the statute for specialized or edge-case scenarios.

Not yet human confirmed as of 2026-06-25.

Montana corporate income tax uses federal taxable income as its starting point, conforming to the Internal Revenue Code in effect for the taxable year, with specific Montana modifications. The Montana Department of Revenue has issued guidance confirming conformity with federal Tax Cuts and Jobs Act (TCJA) international provisions, including IRC § 965 (deemed repatriation), global intangible low-taxed income (GILTI), and foreign-derived intangible income (FDII), to the extent these are included in federal taxable income for the year. This guidance is explicit and limited to TCJA-era provisions.

As of the close of the most recent biennial report (June 30, 2024), neither the Montana legislature nor the Department of Revenue had adopted, modified, or issued regulatory or administrative guidance addressing the state tax treatment of corporate income tax provisions or benefits from the CHIPS Act or the Inflation Reduction Act (IRA) of 2022, or subsequent modifications to GILTI and FDII. The biennial report and all publicly available DOR policy statements are silent regarding state conformity or decoupling from any new federal tax incentives, credits, or exclusions created after the TCJA, including CHIPS/IRA provisions.

The Department's published guidance for international provisions is limited to TCJA matters and does not contain analysis or instructions for CHIPS Act or IRA corporate provisions. No official statement addresses whether these new federal changes will flow through to the Montana corporate income tax base for tax years after 2024. Montana corporate taxpayers facing these issues should check for updated DOR advisories or future legislative action.

Source: Montana Department of Revenue, Biennial Report July 1, 2022–June 30, 2024, p. 40

Source: Montana DOR, 'Montana Corporate Income Tax Treatment of International Tax Provisions under Tax Cuts and Jobs Act of 2017'

Unable to confirm as of 2026-06-29.

Montana corporate income tax returns must be filed annually by corporations subject to tax under Mont. Code Ann. § 15-31-101. The filing deadline varies depending on whether the corporation uses a calendar year or fiscal year for tax reporting.

## Calendar-Year Corporations

For corporations reporting on a calendar-year basis, the Montana Corporate Income Tax Return (Form CIT) must be filed with the Montana Department of Revenue on or before May 15 following the close of the calendar year. This means calendar-year 2025 returns are due May 15, 2026.

Mont. Code Ann. § 15-31-111(2)(a) establishes this May 15 deadline, which differs from the federal corporate return deadline of April 15. The statute contains an exception: if the May 15 due date falls on a holiday recognized by the Internal Revenue Service that is not observed in Montana, the return may be filed on the first business day after the holiday under § 15-31-111(2)(b)(i).

## Fiscal-Year Corporations

If the corporation reports on a fiscal-year basis, the return must be filed with the department on or before the 15th day of the 5th month following the close of its fiscal year. For example, a corporation with a fiscal year ending September 30 must file by February 15 of the following year.

Source: Mont. Code Ann. § 15-31-111(2)

## Automatic Extension

Montana allows corporations an automatic extension of up to 6 months for filing their corporate income tax return. No separate extension request form is required; the extension is granted automatically under § 15-31-111(3)(a). For calendar-year corporations, this extends the filing deadline from May 15 to November 15. For fiscal-year corporations, the extended deadline is the 15th day of the 11th month following the close of the fiscal year.

The automatic extension applies only to the time to file, not the time to pay. The tax liability remains due and payable on the original deadline (the 15th day of the 5th month following the close of the tax year), as specified in Mont. Code Ann. § 15-31-101(3). Any tax not paid by the original due date is subject to penalty and interest under § 15-31-111(3)(a) and § 15-31-510(2), even if the return itself is timely filed under the extension.

The department may grant an additional extension beyond the automatic 6-month period whenever good cause exists, pursuant to § 15-31-111(3)(b).

## Disaster Relief Extensions

The Montana Department of Revenue may extend filing dates and defer or waive interest, penalties, and other effects of late filing for a period not exceeding one year for taxpayers affected by a federally declared disaster or a terroristic or military action recognized for federal tax purposes under 26 U.S.C. § 7508A. This relief is granted under Mont. Code Ann. § 15-31-111(2)(b)(ii).

## Payment Due Date Distinct from Filing Deadline

Mont. Code Ann. § 15-31-101(3) specifies that the corporate income tax is due and payable on the 15th day of the 5th month following the close of the tax year, subject to the estimated-tax provisions in § 15-31-502. This payment deadline does not change when the filing deadline is extended. The statute clarifies that the tax becomes a lien on the last day of the tax year in which the income was earned and is for the privilege of carrying on business in Montana for that tax year.

Source: Mont. Code Ann. § 15-31-111

Source: Mont. Code Ann. § 15-31-101(3)

Montana requires corporations to make quarterly estimated income tax payments if their estimated tax liability for the year is $5,000 or more. The requirement is triggered by Mont. Code Ann. § 15-31-502(2)(a), which states that any corporation with estimated tax of $5,000 or more must make four equal installment payments during the tax year.

Threshold: The $5,000 threshold is measured against the estimated annual corporate income tax (including any surtax) after credits. If a corporation expects to owe less than $5,000 for the year, it is not required to make estimated payments.

Due dates: The quarterly payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the corporation’s taxable year. For calendar year filers, this is April 15, June 15, September 15, and December 15. Each payment must equal 25% of the required annual payment.

Required annual payment: This is the lesser of (a) 80% of the tax shown on the current year’s return, or (b) 100% of the tax shown on the preceding year’s return (if a full 12-month period and a return was filed). This safe harbor is codified in ARM 42.23.606 and conforms to Mont. Code Ann. § 15-31-502. Special rules may apply for corporations with short tax years or those using the annualized income method (see ARM 42.23.607).

Penalties and interest: If a corporation fails to make a required estimated payment or underpays, underpayment interest will accrue in accordance with Mont. Code Ann. § 15-31-510, calculated using the rate in Mont. Code Ann. § 15-1-216. The penalty may be avoided using the safe harbor methods described above. The Montana Department of Revenue applies these provisions when reviewing returns and instructs corporations to use Form CIT-UT to calculate and report underpayment interest when filing the annual return.

Source: Mont. Code Ann. § 15-31-502 Source: Mont. Admin. R. 42.23.606 Source: Mont. Admin. R. 42.23.607 Source: Mont. Code Ann. § 15-31-510

Not yet human confirmed.

Montana provides a specialized corporate income tax exemption for certain newly organized research and development (R&D) firms under Mont. Code Ann. § 15-31-103. A corporation organized for the purpose of conducting research and development or manufacturing, and that has not previously done business in Montana, may be exempt from state corporate income tax on net income from its research and development activities in Montana for its first five taxable years.

Who qualifies: The exemption applies only to corporations (not other types of entities) that are newly organized for the purposes described above and have not previously conducted business within Montana. The law does not require the corporation’s purpose to be solely for research and development, but qualifying activities must fall within the statutory categories.

Length and scope of exemption: The exemption covers "all net income earned from research and development activities" conducted in Montana by a qualifying firm during its first five taxable years of activity in the state. It does not extend to income from unrelated business activities or to activities conducted outside Montana. After the five-year period, all corporate net income becomes fully subject to Montana corporate income tax.

Application: To obtain the exemption, the corporation’s president, vice president, manager, or designated agent must file an application with the Montana Department of Revenue. The application must be on a form prescribed by the department and submitted within the calendar quarter in which the corporation begins doing business in Montana. Failure to timely apply may disqualify the corporation from the exemption for that year.

This exemption is specifically provided for in Mont. Code Ann. § 15-31-103 and does not alter other registration or filing requirements imposed by Montana on corporations.

Source: Mont. Code Ann. § 15-31-103

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Not yet human confirmed as of 2026-06-15. The only update was repairing the dead primary-source link. No substantive change was detected in the statute text as of the 2026 legislative session.

Montana corporations may deduct net operating losses (NOLs) as set forth in Mont. Code Ann. § 15-31-119 and Montana Admin. R. 42.23.802. This update repairs a prior dead statutory URL. The legal framework for NOL calculation, carryforward, and carryback is current as of July 2026, with no material statutory or regulatory amendments detected after legislative and DOR review through the 2026 tax year.

Calculation of Net Operating Loss A Montana NOL is calculated using Montana taxable income as defined in Mont. Code Ann. § 15-31-114, not federal taxable income, and must be separately computed each year a loss arises. The corporation recomputes its net income for Montana purposes—starting with federal gross income, but applying all Montana-specific additions, subtractions, and apportionment before determining if an NOL exists (see § 15-31-119(1) and Admin. R. 42.23.802(2)-(4)). A federal NOL deduction is not allowed in computing Montana net income (expressly disallowed by § 15-31-119(3)).

Source: Mont. Code Ann. § 15-31-119(1), (3)

Carryforward and Carryback Periods For tax years beginning after December 31, 2017, a Montana NOL may be:

• Carried forward for up to ten (10) taxable years after the year of loss (§ 15-31-119(2), Admin. R. 42.23.802(4)).
• Carried back up to three (3) tax years, subject to a $500,000 maximum per loss year, per tax year of carryback (§ 15-31-119(2), Admin. R. 42.23.802(5)).

A corporation may elect to waive the carryback period by making an irrevocable election on the original filed return for the year of the loss (Admin. R. 42.23.802(8)). For pre-2018 loss years, shorter carryforward and more restricted carryback periods apply—practitioners must consult the versions of § 15-31-119 and related rules in effect for those years.

Source: Montana Admin. R. 42.23.802(4)-(8)

Deduction Limits and Usage Sequence Montana does not impose an “80% of income” limitation for NOLs as under recent federal law; a Montana NOL may offset up to 100% of Montana net income for a year, but may not reduce Montana net income below zero (§ 15-31-119(2)). All available NOLs from the earliest loss year must be applied first, and must be fully absorbed before NOLs from subsequent years are used (FIFO rule, Admin. R. 42.23.802(7)). If a carryback generates or increases a credit for prior-year taxes, § 15-31-119(4) and Admin. R. 42.23.802(9)-(10) govern the procedures and limitations for refunds.

Source: Mont. Code Ann. § 15-31-119(2), (4) Source: Montana Admin. R. 42.23.802(7)-(10)

Interaction with Federal NOLs Federal NOLs and federal carryovers are not recognized for Montana corporate income tax. Only a loss computed under Montana law and these Montana rules may be used; Montana and federal NOLs often differ in amount, period, and availability (§ 15-31-119(3)).

Source: Mont. Code Ann. § 15-31-119(3)

Not yet human confirmed as of 2026-07-01. The only update was repair of the dead link for § 15-31-119—no substantive legal changes detected in governing law or regulation as of this date.

Montana does not impose an alternative minimum tax (AMT), surtax, or other supplemental tax on corporations beyond the standard corporate income tax structure. The only taxes imposed on corporate net income are those set forth in Mont. Code Ann. § 15-31-121, which details a flat tax rate and a minimum tax, and there is no statutory language authorizing an alternative computation, supplemental excess profits tax, or corporate AMT for C corporations or water’s-edge filers.

Flat Rate and Minimum Tax Montana imposes a single, flat corporate income tax rate of 6.75% on all net income, and 7.0% for corporations electing water’s-edge reporting. A minimum tax of $50 per year applies to every corporation subject to the tax. This minimum tax is not an alternative tax calculation; it is simply the minimum amount due if a corporation’s calculated liability under the ordinary method falls below $50 (see Mont. Code Ann. § 15-31-121(3)).

No AMT or Surtax Provisions There is no separate provision in Montana’s statutes or Department of Revenue guidance describing any alternative minimum tax, base-broadening surtax, or add-on corporate income tax. The Montana Department of Revenue’s public guidance reflects only the single-rate system and minimum tax without mention of an AMT or comparable mechanism for corporations.

Effective Dates This structure is reflected in the 2025 Montana Code Annotated and remains in effect as of the 2026 tax year, with no statutory or regulatory amendments introducing an AMT or surtax as of this date.

Summary Table

• Corporate AMT: None
• Corporate surtax: None
• Minimum tax: $50 per year, as per Mont. Code Ann. § 15-31-121(3)
• Effective for: At least 2025–2026 tax years, per citations below

Source: Mont. Code Ann. § 15-31-121 Source: Montana Department of Revenue – Corporate Income Tax

Not yet human confirmed as of 2026-06-17.

Montana law provides two distinct corporate income tax exemptions of primary interest to practitioners: those for certain nonprofit organizations under § 15‑31‑102 and those for qualifying research and development firms under § 15‑31‑103.

Exempt Entities under § 15‑31‑102 Mont. Code Ann. § 15-31-102(1) exempts from corporate income tax a list of entities similar to those recognized as exempt under IRC § 501(c). Specifically exempt are corporations or associations organized and operated exclusively for religious, charitable, scientific, or educational purposes; fraternal societies under the lodge system; cemetery companies; labor, agricultural, or horticultural organizations; business leagues and chambers of commerce; social welfare leagues; social or recreation clubs; mutual or cooperative organizations for rural electrification; and similar types. The statute also includes DISC (domestic international sales corporations) making a valid election, wool and sheep pools, and certain mutual hail, fire, or irrigation companies.

However, unrelated business taxable income (UBTI), as defined by IRC § 512, is subject to Montana corporate income tax if the organization’s UBTI exceeds $100 for the tax year. Thus, even an otherwise exempt organization may owe corporate income tax on substantial unrelated business income.

Exemption for Research and Development Firms under § 15-31-103 Mont. Code Ann. § 15-31-103 provides an exemption for net income derived from research and development activities for the first five taxable years in Montana for businesses newly organized for this purpose. To qualify, the corporation must apply to the Department of Revenue within the first calendar quarter of commencing business in Montana. The exemption only applies to qualifying R&D income, not to unrelated business income or other operations. Net operating losses for those exempt years are not recognized for carryback/carryforward purposes.

Regulatory guidance clarifies that the exemption under § 15-31-103 is limited to R&D activities, even for qualifying firms, and that the Department may determine the proportion of activity eligible for the exemption based on property and payroll allocation (see ARM 42.23.116).

Notable Exclusions There is no specific corporate income tax exemption under these sections for insurance companies, general for-profit corporations, or most industry-specific categories. Insurance companies receive no blanket exemption, except for certain mutual associations as described above. For-profit businesses must meet the narrow R&D qualification criteria of § 15-31-103 or otherwise are subject to tax.

Source: Mont. Code Ann. § 15-31-102 Source: Mont. Code Ann. § 15-31-103 Source: Mont. Admin. R. 42.23.116

Not yet human confirmed as of 2026-06-17.

Montana uses market-based sourcing for apportioning receipts from sales other than tangible personal property—including services, intangibles, digital goods, Software as a Service (SaaS), and bundled transactions. Effective for tax years beginning after December 31, 2017 (see 2017 Mont. Laws Ch. 341, adopting MTC Art. IV as amended), the statutory and regulatory framework applies as follows:

Services and SaaS Mont. Code Ann. § 15-1-601 (Art. IV-17)(a) provides: “Receipts from a sale of a service are in this state if and to the extent the service is delivered to a location in this state.” This applies to SaaS and cloud computing, which Montana generally treats as a service. If the customer receives or uses a SaaS solution in Montana, those receipts are included in the Montana numerator. If one contract covers both in-state and out-of-state service, only the portion delivered to Montana is sourced to Montana. When the delivery location cannot be determined from contracts or records, a reasonable approximation must be used per ARM 42.26.245.

Digital Goods, Electronically Delivered Software, and Intangibles Digital goods and downloadable software transactions typically fall under the rule for intangibles. Under § 15-1-601 (Art. IV-17)(c), “Receipts from a lease or license of intangible property are in this state if and to the extent the intangible property is used in this state by the purchaser.” For digital content or software downloads, the receipts are included in the Montana numerator if the customer uses the product in Montana. If the location of use cannot be determined after reasonable effort, ARM 42.26.245 requires use of reasonable approximation with supporting documentation.

Bundled Transactions (Goods Plus Services/Intangibles) If a transaction bundles tangible property (such as hardware) and services or digital goods (such as SaaS, downloads, or content access), Montana requires a reasonable and consistent method to allocate receipts between components. Tangible personal property is assigned to Montana if delivered to a Montana location. Service and digital/intangible portions are assigned under the applicable market-based rule described above. The state does not provide a specific allocation formula, but taxpayers must maintain records to support the apportionment approach used.

Fallback/Reasonable Approximation (ARM 42.26.245) ARM 42.26.245 instructs that if receipts cannot be assigned to a state based on contract, taxpayer records, or objective evidence, then a reasonable approximation is required, supported by documentation and applied consistently. If, after good-faith effort, a receipt cannot reasonably be assigned to any state and the taxpayer is not taxable in that state, the amount is excluded from the sales factor.

Montana Authority Is Silent on SaaS and Digital Product Subdefinitions As of June 2026, neither the Montana statutes nor regulations specifically define SaaS or digital goods for corporate apportionment purposes. The categories above must be used by legal substance with reference to available authority and records.

Effective Dates Market-based sourcing rules for services and intangibles, including SaaS and digital transactions, apply to tax years beginning after December 31, 2017. Prior law used cost-of-performance sourcing.

Source: Mont. Code Ann. § 15-1-601 (Art. IV-17) Source: Montana Admin. R. 42.26.245

Not yet human confirmed as of 2026-06-23. Montana statute and regulation do not expressly mention SaaS, digital goods, or bundled methodologies beyond the general sourcing rules for services and intangibles.