How is Montana for Retirement?

Montana’s gorgeous views beckon many senior citizens to enjoy them for their retirement. There’s a reason the state is called ‘Big Sky Country’, after all! While year-round hot climates like Florida get a lot of retirement attention, Montana is known for friendly communities and appealing lifestyles in the shadow of the Rocky Mountains that can be very appealing for the right retiree.

Retirement living in Montana is middle-of-the-road. The state taxes most retirement incomes, while offering rebates for other types of taxes. Social Security benefits are taxable, but the state offers a deduction below certain income levels. Other retirement incomes like pensions and incomes from 401(k) and IRA are considered regular incomes and taxed at the state’s income tax rates. The state has a below-average property tax rate of 0.83%, and there are no statewide sales taxes.

Is Montana tax-friendly for retirement?

Montana is classed as a moderately tax-friendly state for retirees. Provided you are savvy with your spending, you can have a great retirement in this state. However, the state taxes most forms of retirement income and a portion of Social Security income if it exceeds a specific income level.

Your IRA or 401(k) will be treated as regular income, taxed at the state income tax rate for the amount. The income tax rates range from 1% to 6.75% for all tax statuses. However, effective 2024, the state will adopt two tax brackets i.e. 4.7% and 6.5%, depending on the filing status and marital status. The 4.7% bracket applies up to $20,500 for single filers or $41,000 for joint filers. The Head of Household has a $30,750 ceiling. Incomes above these limits fall in the 6.5% tax bracket.

Railroad Retirement benefits are not taxed. However, exemptions for all but the first $5,500 of pension/annuity/Social Security amounts are taxed- remember that the exemption includes all taxable income, too. It is not pension-specific.

If your federal AGI is below $40,980 (single filers) or $43,300 (joint filers), you get an exemption from state taxes of up to $4,400.

How much are sales taxes in Montana?

Montana does not have a state-wide sales tax. However, towns with a population under 5,500 may enact a ‘resort tax’ that fills a similar role, so choose your area carefully. Gasoline is taxed at $0.33 a gallon. The general cost of living here is decidedly average.

How much are property taxes in Montana?

Averaged, the effective property tax rate in Montana is 0.83%. However, the property tax rate you pay varies depending on where you live. Do be aware some new tax cuts and property tax rebates are currently in the works, too.

Montana offers an elderly homeowner tax credit to homeowners age 62 or older. To be eligible for this tax credit, you must have lived in the state for at least 9 months, occupied the same house for at least six months, and paid property taxes on the property you occupy or rent. You can get a full tax credit of up to $1,150 if your total household income is under $45,000.

The pros of retiring in Montana

Scenic views

Montana offers fantastic views, open skies, and sun-bathed summers that are immensely appealing for retirement.

Outdoor activities

Along with those views comes an encouragement to an active senior lifestyle. From pleasant hikes to hunting, fishing, photography, and lazy days enjoying the outdoors, it is immensely appealing if you’re looking to age well.

Great healthcare

As you age, you want to retire in a place with easy access to quality healthcare. Kalispell Regional Medical Center is continually voted among the top hospitals in the nation. Montana has great medical services even with a small population needing them. The state is ranked 23 for healthcare.

Housing prices

While Montana has not been spared by the nationwide jump in housing prices, the average home value sits around $300,000, making retirement home ownership an appealing prospect. This will, of course, vary by location. The local economy is also doing well.

Estate taxes

Montana has no inheritance or estate tax, making it a great place for your golden years if you are hoping to leave a legacy for your family.

The cons of retiring in Montana

Harsh winters

With the beautiful summer and transitional seasons, regrettably, comes a cold winter with dark days and snow. This isn't the climate for those hoping for a continually hot retirement.

Unreliable mobile/internet service

Because of the vast amount of space and low population density, Montana has patchy services for wireless internet and mobile connections in places. You can mitigate this con by choosing your retirement location carefully and sticking to larger urban areas.

Isolated living

While this can be a pro for some people, remember that with low population density can come a sense of isolation. Or you may love the small-town vibes! Seniors with health concerns or who want to feel part of the community can choose larger population centers to mitigate this.

Public transport

While more senior-focused communities have bus routes, public transport is minimal in this state and mostly consists of regional connections rather than intra-town ones. If you plan to travel within and outside the state, a car will provide greater convenience.

Social variety

If you love the outdoors, hockey, or baseball, you will find plenty of that in Montana. Otherwise, there are not a lot of cultural or nightlife pursuits, and those used to very vibrant social scenes may feel adrift. Others will love the peace and tranquility.

Best places to retire in Montana

Deer Lodge

Deer Lodge balances a vibrant retirement community with a small-town atmosphere. Nestled between two mountain ranges in a lush and gorgeous setting, it's one of the friendliest towns in the state, too. The town itself is rich in historic sights and museums, parks, and a nice shop and restaurant scene, offering a great balance between suburban and rural living. The Deer Lodge Medical Center is well thought of.

Bozeman

Bozeman is seen as trendy and youthful, but the cost of living and housing is higher than in other parts of Montana. It is one of the most thriving and interesting cities, with ballet and theater, craft breweries, museums, and bustling markets. The community is welcoming, it has excellent amenities, and the setting is gorgeous. 

Helena

Helena may be the Capital, but that’s part of the charm. Again, the city is packed with a vibrant social scene that appeals to a broad range of interests. Community spirit is strong, and there’s plenty to see and do. Historic sights are commonplace, and there’s plenty of culture to enjoy. It’s also stunningly pretty. Its medical facilities are excellent.

Conrad

If a rural retirement with perks is for you, consider Conrad. It’s quiet, although only an hour from Great Falls, and has excellent golfing facilities. The Glacier National Park lies right at hand, too. With the Pondera Medical Center on hand to keep you healthy and loving life, it’s a great balance between a quiet and an engaged retirement.