Montana’s separate long-term capital gain rates
Montana is unusual: since 2024 it has had lower rates for net long-term capital gains than for ordinary income. For 2026, ordinary income is taxed at 4.7% and 5.65%, while net long-term gains are taxed at 3% and 4.1%, using the same $47,500 single, $71,250 head-of-household and $95,000 joint threshold.
The long-term gain sits on top of ordinary income, so if wages already fill the lower band the whole gain is taxed at 4.1%. Qualified dividends do not get the capital gain rates in Montana. Gains on certain Montana corporate stock can qualify for a separate 0% treatment, which this worksheet leaves to a prepared final liability. Montana has already enacted different thresholds and rates for 2027.
Montana ordinary income and stacked long-term category
Montana’s 2026 resident structure separates ordinary income from the taxable net long-term category. Ordinary rates are 4.7% and 5.65%; long-term rates are 3% and 4.1%. The shared threshold is $47,500 single / separate, $71,250 head or $95,000 joint / qualifying surviving spouse. Long-term income uses only the lower-band room remaining after ordinary income, so a single flat gain percentage is inaccurate.
The continuing Form 2 worksheet caps approved net long-term gain at total Montana taxable income, removes it once to determine ordinary income, and stacks the capped category above ordinary income. A raw eligible gain larger than taxable income is valid and is capped rather than rejected. Qualified dividends remain ordinary for this state category. Qualifying Montana corporate-stock gains with a separate 0% treatment are excluded from this ordinary model and need prepared final liabilities.
Choose the cent statutory-rate estimate or an independently approved continuing whole-tax-box scenario. The latter rounds ordinary, lower-capital and upper-capital boxes separately before adding them; final 2026 form equivalence is not assumed from a dated 2025 form. Prepare approved annual taxable income, net long-term gain and usable nonrefundable credits. The source also distinguishes enacted 2027 thresholds and rates; this worksheet continues to calculate only 2026.
Montana preparation checklist
- Capped annual net long-term category and approved rounding scenario
- Qualified dividends remain ordinary
- Eligible 0% stock needs separate preparation