Easily manage employment in Montana

Payroll management in Montana

Montana has a diverse economy supported by industries such as agriculture, tourism, healthcare, and energy. With state-specific payroll regulations, including a higher minimum wage and strict final paycheck rules, employers in Montana must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in Montana

Employers in Montana must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: Montana’s minimum wage is $10.30 per hour.
• Overtime rules:
• Montana follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Some exemptions apply based on job classification and industry.

State income tax

• Montana has a progressive state income tax system, with rates ranging from 1% to 6.75%, depending on income levels.
• Employers must withhold state income tax and remit it to the Montana Department of Revenue.

Unemployment insurance (UI) tax

• Employers must contribute to Montana’s Unemployment Insurance (UI) program, managed by the Montana Department of Labor & Industry.
• The UI wage base in Montana is $41,700.
• UI tax rates vary based on an employer’s experience rating and range from 0% to 6.12%.
• New employers typically pay a 1.0% UI tax rate.

Workers’ compensation

• Montana law requires all employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
• Some exemptions apply, including certain agricultural workers and independent contractors.

Payroll tax filing and payment deadlines

• Employers must register for a Montana Employer Withholding Tax Account with the Montana Department of Revenue.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Montana Department of Labor & Industry.
• Payroll tax payments can be made electronically through the TransAction Portal (TAP).

Quick facts: Important considerations for employers

• State minimum wage compliance: Montana’s minimum wage is higher than the federal rate, and employers must comply with state laws.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck immediately upon discharge.
• If an employee resigns, the final paycheck must be provided by the next scheduled payday or within 15 days, whichever comes first.
• New hire reporting: Employers must report new hires to the Montana New Hire Reporting Program within 20 days.
• Paid sick leave: Montana does not require employers to provide paid sick leave, but employers may choose to offer it as a benefit.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: Montana is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in Montana with Remote

Managing payroll in Montana requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.