Montana Sales Tax Nexus: No Sales Tax, What Still Applies

Does Montana have a sales tax, and is there a Montana nexus threshold?

No. Montana's Department of Revenue says the state does not have a general sales tax. A seller has no Montana sales tax to collect, no Montana sales tax permit to get for ordinary sales and no economic nexus threshold to measure.

"No sales tax" is not "no tax". Montana still taxes lodging, rental vehicles and telecommunications, can tax a business's income, and lets some towns add a resort tax. Your own state and your buyers' states have separate rules that Montana does not change.

A case is not simple when you:

• sell into several states that do have a sales tax
• rent out a Montana property for stays under 30 days
• run a C corporation or a partnership with Montana customers
• sold into a sales tax state without collecting

Gather sales by destination state and month, booking records for any rental, your entity type, and the state where each owner lives.

I sell online from another state: do I collect sales tax for Montana buyers?

No Montana sales tax applies to a sale shipped to a Montana buyer, because the state has no general sales tax. Montana's guidance says the Supreme Court's Wayfair decision on remote sellers does not affect Montanans buying online for the same reason.

That answers Montana only. Your home state and every other state where you pass a threshold still apply. For the tests and each state's line, see when you must collect sales tax and the threshold list by state.

Sales to Montana can still matter for income tax, covered below.

I run my business in Montana: do I collect sales tax for buyers in other states?

Often yes, where the buyer's state requires it. Montana's Department of Revenue states that a Montana business selling online to buyers in a state that requires online retailers to collect sales tax will need to collect and pay it.

Being in a no-sales-tax state gives no protection in the buyer's state. Test each state where you ship by its own threshold, usually measured on sales or transactions into that state. The Department's page advises online retailers to seek competent advice on collecting and remitting for sales tax states.

If you may have crossed a line already, see catching up on uncollected sales tax.

Does a Montana LLC remove sales tax in my customers' states or my home state?

No. Montana's guidance says a Montana business must still collect in buyer states that require it, as above. The Department's pages describe Montana's own taxes only, so nothing on them removes another state's sales tax.

If you live outside Montana, your home state decides its own rules for a business you run from there; check that state's revenue department. A Montana LLC also has its own state duties; the LLC annual fee and report guide covers them.

What does Montana tax instead of a general sales tax?

Montana taxes specific services and activities. Each has its own rate, rules and reports.

The local resort tax is separate from the state taxes. The Department of Revenue does not administer it. Voters in a designated resort community or area approve it, and it can apply to lodging, restaurants, bars, destination recreation and luxuries sold there. Ask the local government in the resort area for the rate, rules and filing.

I rent a cabin or short-term rental in Montana: what do I charge, register for and file?

Montana lists vacation rentals, including a home, apartment, timeshare, room or rooms, as lodging accommodations that collect and remit the lodging facility tax. The combined rate is 8%: 4% sales tax plus 4% use tax.

Montana law defines accommodations as overnight lodging for periods of less than 30 days, and counts in the taxed price any fee a guest must pay to book, including a platform's charge.

Booking platforms. Short-term rental marketplaces and online hosting platforms must register and collect, report and pay the tax on sales made through them. The host stays responsible for bookings outside the platform, such as direct reservations. The Department's page does not say whether a host who books only through a platform still needs a seller's permit. Ask the Department's Business Tax Unit before assuming either way.

Does a Montana business or its owner owe Montana income tax?

It can. Montana income tax follows who earns the income and how the business is organized. The Department says Montana source income includes income from work performed in Montana, products sold to Montana customers, and selling, renting or leasing property in Montana.

A C corporation selling in and outside Montana whose only Montana activity is sales may elect the alternative gross sales tax of 0.5% of its Montana sales instead. The Department requires that it owns or rents no Montana real estate or tangible personal property and has Montana gross sales of $100,000 or less.

A nonresident self-employed person or pass-through owner cannot use the 30-day wage filing exclusion, which covers certain employees only.

For income tax across several states and how profit is divided, see business income tax in other states. For federal and self-employment tax on selling profit, see online seller income tax.

When does an out-of-state seller owe Montana income tax?

When it has nexus: a connection to Montana that lets the state tax it. The Department says generally any activity in Montana other than soliciting sales of tangible goods creates nexus and a filing requirement.

Federal Public Law 86-272 limits what states can do here. The Department notes that, with some exceptions, states cannot impose income tax on a business whose only activity in the state is selling tangible personal products. The Department points to Administrative Rules of Montana 42.26.501 through 42.26.511 for protected and unprotected activities. This is income tax only. It does not affect the lodging tax or the other Montana taxes above.

The protection is narrow. The Department's nexus page names only solicitation of sales of tangible goods, and says other activity in Montana generally creates nexus. Do not assume it covers a service, a digital product or any Montana activity beyond soliciting orders.

If you have read the rules and are still unsure, the Department offers a nexus questionnaire (Form NEXUS). A nexus auditor reviews it and the Department gives a determination. Answering it tells the state about your Montana activities, so consider having a professional review it first.

What resale certificate do I give a vendor in another state?

Montana has no seller's permit or exemption number for ordinary sales, so a Montana business buying goods to resell gives the vendor the Montana Business Registry Resale Certificate. Do not file it with the Department; give it to the out-of-state vendor.

The vendor may accept it in place of its own resale certificate but does not have to. Some states, including Washington, may require their own form or more information. If a vendor refuses to sell without a Montana permit or exemption number, the Department asks the vendor to contact it.

What if I already sold into sales tax states without collecting?

Montana's lack of a sales tax gives no relief in other states. Each state where you passed its threshold may expect registration and tax, and the exposure depends on that state's rules and lookback. See catching up on uncollected sales tax for the options and the steps to take before a state contacts you.

Example

These examples use US dollars and round numbers.

An Idaho shop ships to Montana buyers

An Idaho online shop ships $60,000 of goods to Montana buyers in a year. It has no Montana sales tax to collect and nothing to register for. Idaho and every other buyer state still apply under their own rules. For income tax, it checks whether its Montana activity goes beyond soliciting sales of goods.

A Bozeman LLC sells to other states

A Bozeman LLC sells $250,000 of goods online to buyers in Washington, Texas and California. Montana charges no sales tax at home. The Department says the LLC must still collect where those states require it, so it checks each state's threshold using its sales by state and month. It does not assume the Montana LLC stops that.

A couple rents a cabin

A couple rents out a Montana cabin on 5-night stays at $200 a night, both directly and through a booking platform. A direct stay of $1,000 carries lodging tax of $80 at 8%, collected under a seller's permit. The platform handles tax on its own bookings. If the cabin sits in a resort area, local resort tax is separate. A guest staying 30 continuous days or more is exempt from the lodging tax.

Different for you?

• You sell into many states: work out where you must collect with when you must collect sales tax and state thresholds, then get bookkeeping help to sort sales by state.
• You already missed collecting in other states: start with catching up on uncollected sales tax.
• You rent a Montana property direct and on platforms: the split between your tax and the platform's matters; bookkeeping help keeps booking records by channel.
• Your C corporation or partnership has Montana customers or activity: see business income tax in other states and corporate tax help.
• You are comparing another no-sales-tax state: see Oregon LLCs for online sellers.
• You want the federal side of selling income: see online seller income tax.