Payroll Montana: Employer Tax and Software Guide

On the tax side, Montana is one of the easiest states in the country to run payroll in. Two brackets. No local income tax anywhere. No general sales tax. Withholding and unemployment insurance are the entire state-level obligation.

On the employment law side, it is the hardest. Montana is the only state that abolished at-will employment by statute, which means firing someone who has cleared their probationary period requires documented good cause or the company faces up to four years of back wages. Discharge a person and their final paycheck can be due within four hours. There is no tip credit, so a server earns the full $10.85 minimum in cash before a single tip. And since July 2025, every new hire has to be verified before their first day, with documents retained.

This guide covers what Montana requires from employers as of July 2026, the rules that most commonly generate wage claims here, and how 10 payroll providers price the work at 10, 25, and 50 employees.

What Montana requires from employers

State income tax withholding after HB337

House Bill 337, signed in April 2025, changed Montana withholding in two directions at once: it widened the lower bracket substantially and cut the top rate. The changes apply to tax years 2026 and 2027.

For 2027 the lower bracket widens again, to $65,000 single and $130,000 joint, and the top rate falls to 5.4 percent. Long-term capital gains stay at 3.0 and 4.1 percent with brackets adjusted to match, and the Montana earned income tax credit doubled to 20 percent of the federal credit beginning in 2026. The Department of Revenue adjusts the wage withholding tables to match and asks employers and payroll providers to confirm they are running current figures.

Unemployment insurance and a wage base that moves every year

Montana funds unemployment insurance entirely from employer contributions. The 2026 taxable wage base is $47,300, which the Department of Labor and Industry sets at 80 percent of the state average annual wage from two years prior, rounded to the nearest hundred dollars.

That figure was $45,100 in 2025 and it recalculates every year, which is different from states that hold a wage base steady for a decade. Montana is running Schedule 1 for 2026, putting experience-rated employers between 0.00 and 6.12 percent with an average near 0.95 percent. New employer rates are assigned by industry rather than as one flat number, generally between 1.00 and 2.00 percent. An administrative fund assessment of 0.18 percent applies on top for experience-rated employers.

Verification before the first day

The Legal Employment and Government Accountability Law, House Bill 226, took effect July 1, 2025. It requires every Montana employer to verify work authorization before a new employee begins work, using either E-Verify or a completed Form I-9 with retained copies of the supporting documents.

Wage rules that catch employers out

No tip credit, no meal credit, no training wage

Montana's minimum wage is $10.85 per hour as of January 1, 2026, indexed annually to the Consumer Price Index under Mont. Code Ann. 39-3-409 and announced no later than September 30 each year for the following January.

The rate itself is unremarkable. What catches out-of-state operators is what Montana does not allow. Per the Employment Relations Division, no tip credit, meal credit, or training wage exists under Montana law.

For a restaurant group moving into Montana from a tip-credit state, this single rule can change the labor cost model materially. Overtime is standard: 1.5 times the regular rate after 40 hours in a week.

The ten business day rule

Montana does not dictate a pay frequency, but Mont. Code Ann. 39-3-204 sets an outer boundary: wages must be paid within ten business days after they become due and payable. Weekly, biweekly, semi-monthly, and monthly cycles are all permitted as long as each satisfies that limit. Pay statements showing hours, rate, gross wages, and itemized deductions are required on every payday, and a missing statement is itself a Wage Payment Act violation.

Termination, final pay, and the only state without at-will employment

The Wrongful Discharge from Employment Act

Montana abolished at-will employment for private employers in 1987. The Wrongful Discharge from Employment Act, at Mont. Code Ann. 39-2-901 through 39-2-915, is the single most consequential employment statute in the state and has no equivalent anywhere else in the country.

Once an employee completes a probationary period, termination requires good cause, defined by statute as reasonable job-related grounds based on failure to satisfactorily perform job duties, disruption of the employer's operation, or another legitimate business reason. An employee who prevails can recover up to four years of lost wages and fringe benefits plus interest, with punitive damages available in retaliation cases.

The probationary period is set by the employer and must be communicated to the employee at or before the start of work. Employers can shorten it, extend it, or waive it entirely, and published sources describe different defaults, so the practical advice is to state the period explicitly in the offer letter and handbook rather than relying on a default. Employers are also bound to follow their own written personnel policies; failing to follow your own stated termination procedure is itself grounds for a claim.

Final paycheck within four hours

Montana's discharge deadline is among the strictest in the United States, and it is the rule most likely to catch a payroll process that only runs on schedule.

Willful failure to pay carries a penalty under Mont. Code Ann. 39-3-206 of up to 110 percent of the unpaid wages, calculated as the wages plus a 10 percent penalty, with interest running from the due date. Our guide to final paycheck rules covers how these deadlines compare across states.

The operational consequence is specific: a Montana employer needs the ability to run an unscheduled off-cycle payroll on the same day, without a per-run fee and without a multi-day processing window. That is a real differentiator between providers and it is worth testing during a trial rather than discovering during a termination.

10 payroll providers for Montana employers compared

Every provider below files Montana withholding and unemployment insurance. Since Montana has no local tax layer, the differentiators here are off-cycle payroll speed, how the platform handles the annually shifting wage base, and whether onboarding can capture the HB 226 verification step.

OnPay

One plan at $49 per month plus $6 per employee, everything included, no tiers. Tax filing covers all 50 states with no multi-state surcharge, and year-end W-2 and 1099 filing sits in the base price. OnPay maintains an accurate Montana rate page, which is a reasonable signal of how closely a provider tracks state changes.

Gusto

The most common first payroll purchase for US small businesses, with automatic tax filing, published pricing, and the strongest onboarding experience among payroll-first platforms. Simple runs $49 per month plus $6 per employee after a base increase in March 2026.

Simple covers a single state only, so a hire in Wyoming, Idaho, or North Dakota moves you to Plus at $80 plus $12 per employee. Off-cycle runs are supported at no per-run charge, which matters given Montana discharge timing.

Square Payroll

At $35 per month plus $6 per person, Square has the lowest published base fee among full-service providers, with unlimited pay runs and three deposit speeds including next-day. For Montana's seasonal economy, hospitality in Whitefish and Big Sky, guiding outfits, and restaurants in Bozeman and Missoula, the combination of Square point of sale timecards feeding payroll and fast off-cycle runs fits the operating pattern well.

Patriot Software

The cheapest legitimate full-service payroll available. Full Service is $37 per month plus $5 per employee and includes federal and state tax filing plus new hire reporting. Basic is $17 plus $4 if you file taxes yourself. Additional states cost $12 per month each.

The caution for Montana is deposit speed rather than price: standard direct deposit takes two to four business days, which does not fit a four-hour discharge deadline unless you keep the ability to cut a physical check.

SurePayroll

Owned by Paychex and aimed at very small employers and household employers. Full Service is $29 per month plus $7 per employee, with a flat $9.99 monthly multi-state fee. AutoPayroll on both plans is unusual at this price, though the platform has no digital onboarding workflows, which is a gap given HB 226 verification requirements.

QuickBooks Workforce Payroll

Formerly QuickBooks Payroll. Core is $50 per month plus $6.50 per employee, and the case for it is the general ledger sync: if the books already live in QuickBooks Online, payroll entries land without an export step. Same-day direct deposit is available on higher tiers, which is the tier worth considering for Montana termination timing.

ADP RUN

ADP has the deepest tax compliance engine in the category. In Montana the specific value is quieter than in local-tax states: annual wage base recalculations and industry-assigned new employer rates reach ADP tables without anyone at your company tracking Department of Labor notices.

The cost is opacity. ADP does not publish RUN pricing; third-party estimates put Essential near $79 per month plus $4 per employee, but every quote is individual. Contracts typically run a year with automatic renewal and a 30 to 60 day cancellation window.

Paychex Flex

Paychex competes on service rather than software, with a named representative at higher tiers. Pricing is quote-only and quarterly administrative charges appear regularly in customer reports. In a state where a termination question carries four-year back-pay exposure, having someone to call has more value than it does elsewhere.

Paylocity

Paylocity sits between small-business payroll and full HCM, aimed at companies that have outgrown basic payroll. The HR module covers performance management, which is directly relevant in a good-cause state where documented performance history is the defense against a wrongful discharge claim. Pricing is quote-based and implementation is a project.

Rippling

Rippling unifies payroll, HR, and IT provisioning on one employee record. The core platform is $35 per month plus $8 per employee, with payroll as a separate module. Real-world all-in costs land between $25 and $45 per employee per month once you assemble a working configuration.

What each provider actually costs a Montana employer

The table below models published rates at three headcounts. Montana borders four states plus Canada, and Bozeman and Billings employers routinely hire across the Wyoming, Idaho, and North Dakota lines, so the second-state column deserves attention.

Patriot and Square anchor the low end, and Square includes unlimited fast pay runs which is worth more in Montana than the $8 monthly difference suggests. Gusto Simple is competitive until a single out-of-state hire forces the Plus tier, taking a 25-person payroll from $199 to $380 per month.

Choosing a payroll provider for Montana

Before you choose

FirstHR does not process payroll, file payroll taxes, or administer benefits. Every provider above does something we do not, and if running payroll is the problem in front of you, one of them is the answer.

What we handle is the document layer around it: onboarding workflows, e-signatures on I-9s and offer letters, employee records, and document management for 5 to 50 employee US teams at a flat $98 to $198 per month. Two of the Montana requirements above are document problems rather than payroll problems, namely verifying and retaining work authorization before day one under House Bill 226, and holding the signed acknowledgments and records that a good-cause termination has to rest on. If those are where things break, that is the gap we built for.

Frequently Asked Questions

What are the current Montana payroll tax rates?

Two brackets: 4.7 percent up to $47,500 single, $71,250 head of household, and $95,000 married filing jointly, with 5.65 percent above. House Bill 337 cut the top rate from 5.9 percent and schedules a further drop to 5.4 percent in 2027. There is no local income tax and no general sales tax anywhere in Montana.

What is the Montana SUI wage base and rate?

The 2026 wage base is $47,300, set at 80 percent of Montana's 2024 average annual wage of $59,106.64. Montana runs Schedule 1 for 2026, putting experience-rated employers between 0.00 and 6.12 percent, averaging around 0.95 percent. New employer rates are industry-assigned, generally 1.00 to 2.00 percent, plus a 0.18 percent administrative fund assessment.

Does Montana allow a tip credit?

No. The Employment Relations Division states plainly that no tip credit, meal credit, or training wage is allowed. Tipped employees receive the full $10.85 cash minimum and keep tips on top. The only exception is a non-FLSA business with gross annual sales of $110,000 or less, which may pay $4.00 per hour.

When is a final paycheck due in Montana?

For a discharge or layoff, immediately: postmarked that day, or paid by the earlier of close of business or four hours after notice. A pre-existing written policy can extend this to the next payday or 15 days, whichever comes first, but no further. If the employee quits, wages are due on the next payday for that period or within 15 days, whichever is first.

Is Montana an at-will employment state?

No, and it is the only state that is not. The Wrongful Discharge from Employment Act replaced at-will employment with a good cause standard in 1987 for private employers, applying once an employee completes their probationary period. Remedies run up to four years of lost wages and fringe benefits plus interest, with punitive damages possible in retaliation cases.

What is Montana's employment verification requirement?

Since July 1, 2025, House Bill 226 has required every employer to verify work authorization before a new hire begins work, via E-Verify or a completed Form I-9 with retained supporting document copies. Penalties escalate from $500 per unauthorized employee to $1,000, then to $2,500 plus license suspension.

How often must Montana employers pay wages?

There is no mandated frequency, but wages must be paid within ten business days after becoming due and payable while the employee is still employed. Weekly, biweekly, semi-monthly, and monthly cycles all work within that limit. Pay statements showing hours, rate, gross wages, and itemized deductions are required each payday.

Does Montana have local payroll taxes?

No. No city or county in Montana levies an income tax, and there is no general state sales tax. State withholding and unemployment insurance are the only two state-level payroll obligations. Some third-party guides incorrectly suggest local taxes may apply; they do not.

How much does payroll software cost for a Montana small business?

At 10 employees, published July 2026 rates run roughly $87 for Patriot Full Service, $95 for Square, $99 for SurePayroll, $109 for OnPay or Gusto Simple, and $115 for QuickBooks Core. At 50 employees the same plans land between $287 and $375. ADP RUN, Paychex Flex, and Paylocity quote individually. See the payroll pricing guide for how these models compare generally.