Montana — Sales & Use Tax

Montana does not impose a general statewide sales or use tax on tangible personal property or most services.

Source: Montana Department of Revenue – Sales Tax Guidance

The Montana Constitution limits any future general statewide sales tax or use tax to a rate not exceeding 4%. This constitutional limit was approved by voters as Constitutional Amendment No. 27 on November 8, 1994. The limit does not prohibit a sales tax outright, but the Montana Legislature has not enacted one.

Source: Montana Constitution Article VIII, Section 16

Montana is one of five U.S. states with no general statewide sales tax, the others being Alaska, Delaware, New Hampshire, and Oregon.

## Selective sales and use taxes

Although Montana imposes no general sales tax, the state does impose selective sales and use taxes on limited categories:

Lodging. Montana imposes a combined 8% tax on accommodations and campgrounds for stays of less than 30 consecutive days, consisting of a 4% lodging facility use tax (Title 15, Chapter 65, MCA) and a 4% lodging facility sales tax (Title 15, Chapter 68, MCA).

Source: Mont. Code Ann. § 15-68-102

"Accommodations" means short-term rentals, sleeping rooms, camping spaces, or other units offered for overnight lodging periods of less than 30 days to the general public for compensation, including hotels, motels, campgrounds, resorts, bed and breakfast facilities, vacation homes, timeshares, and similar properties. Low-cost facilities whose average daily accommodation charge is less than 60% of the state lodging reimbursement rate are exempt.

Source: Mont. Code Ann. § 15-68-101

Rental vehicles. Montana imposes a 4% sales and use tax on the base rental charge for rental vehicles rented for 30 days or less. The tax applies to light vehicles, motorcycles, motorboats, sailboats, and off-highway vehicles rented without a driver or operator and designed to transport 15 or fewer passengers.

Source: Mont. Code Ann. § 15-68-102

Local resort taxes. Certain designated resort communities may impose local resort taxes up to 3% on retail sales of goods and services within the resort area. These taxes are authorized under Title 7, Chapter 6, Part 15, MCA and are distinct from the statewide selective taxes.

Source: Montana Code Annotated §§ 7-6-1501 through 7-6-1551

## Practical implications

For sellers of tangible personal property and general services: No registration or collection obligation exists for general sales tax. Montana businesses selling tangible goods or performing services (other than lodging or vehicle rental) do not collect Montana sales tax from customers.

For remote sellers shipping into Montana: Remote sellers have no obligation to register for or collect a general Montana sales tax, regardless of sales volume. The U.S. Supreme Court's decision in South Dakota v. Wayfair, 138 S. Ct. 2080 (2018), does not affect Montana because the state imposes no general sales tax.

Source: Montana Department of Revenue – Sales Tax Guidance

For Montana sellers shipping to other states: Montana businesses that sell to customers in states with sales tax may be required to collect and remit those states' sales taxes if the business meets the destination state's economic nexus thresholds. Each state sets its own thresholds and rules.

Persons who wish to engage in business within Montana that is subject to the lodging facility sales and use tax must obtain a permit before engaging in business. The Montana Department of Revenue issues a separate numbered permit for each location in which the person maintains an office or place of business within Montana.

Source: Mont. Code Ann. § 15-68-401

Montana imposes a combined 8% tax on accommodations and campgrounds for stays of less than 30 consecutive days. This combined rate consists of two separate taxes collected together by the seller from the purchaser and remitted to the Montana Department of Revenue:

Lodging Facility Use Tax: 4% of the accommodation charge, imposed under Title 15, Chapter 65, MCA. Revenue from this tax is allocated to state special revenue funds for tourism promotion, state parks, the Montana Historical Society, and other tourism-related purposes.

Lodging Facility Sales Tax: 4% of the sales price, imposed under Title 15, Chapter 68, MCA. Revenue from this tax is primarily deposited in the general fund (75%), with 25% allocated to Montana Heritage Center construction and historic preservation.

Both taxes are imposed on the purchaser but collected by the seller and held in trust for the state.

Source: Mont. Code Ann. § 15-68-102

## Rate history

The lodging facility sales tax rate increased from 3% to 4%, effective in the 2019 legislative session, pursuant to Senate Bill 338. Prior to that date, the combined lodging tax rate was 7% (4% use tax plus 3% sales tax). The lodging facility use tax has remained at 4% since its original enactment in 1987.

Source: Montana Legislative Fiscal Division – Montana Historic Preservation Analysis, 2027 Biennium

## Tax base – what is taxable

The tax applies to the sales price, defined as the total amount paid by the purchaser for accommodations. Unless specifically excluded, the sales price includes any separate charge or fee that a purchaser must pay to facilitate the sale of accommodations. This definition captures charges beyond the base nightly room rate.

Taxable charges (when required to secure the accommodation):

• Base room charges
• Cleaning fees
• Extra person charges
• Early check-in or late check-out fees
• Resort fees
• Roll-away bed charges
• In-room safe charges
• Convenience fees
• Service commissions or other charges imposed by an online hosting platform (short-term rental marketplaces)

Excluded from the tax base (when separately stated):

• Charges for meals
• Transportation charges
• Entertainment charges
• Meeting, conference, or banquet space charges when offered separately to the public for nonlodging purposes

The distinction turns on whether the charge is necessary to facilitate the sale of the accommodation. If the purchaser must pay the charge to secure the lodging, it is part of the taxable sales price. Charges for services or amenities unrelated to the overnight stay may be excluded if they are separately stated on the invoice or billing document.

Source: Mont. Code Ann. § 15-68-101(12)

## Covered facilities

"Accommodations" means short-term rentals, sleeping rooms, camping spaces, or other units offered for overnight lodging periods of less than 30 days to the general public for compensation. Accommodations include units located in property represented to the public as a hotel, motel, campground, resort, dormitory, condominium inn, dude ranch, guest ranch, hostel, public lodginghouse, bed and breakfast facility, vacation home, home, apartment, timeshare, or rooms rented by or on behalf of the owner or seller.

Facilities or units rented by the same user for a period of 30 consecutive days or more are exempt from both the lodging facility use tax and the lodging sales tax.

Source: Mont. Code Ann. § 15-68-101(1)

## Low-cost facility exemption

Facilities whose average daily accommodation charge (ADAC) for single occupancy does not exceed 60% of the amount the state of Montana reimburses for lodging under Mont. Code Ann. § 2-18-501 are exempt from both taxes. The ADAC is calculated by dividing total annual room revenue by total annual room nights sold for single occupancy. Double occupancy rates, coupon rates, and discounted rates are not considered in the ADAC calculation. The state reimbursement rate for in-state lodging is subject to periodic adjustment; practitioners should verify the current threshold with the Montana Department of Revenue.

Source: Mont. Code Ann. § 15-68-101(1)(b)

Lodging facility sales and use tax returns must be filed quarterly. Returns and payment for each calendar quarter are due on or before the last day of the month following the quarter in which the taxable transaction occurred. For example, the return for Q1 (January–March) is due April 30; Q2 (April–June) is due July 31; Q3 (July–September) is due October 31; and Q4 (October–December) is due January 31.

Source: Mont. Code Ann. § 15-68-502

Montana imposes a 4% sales and use tax on the base rental charge for rental vehicles rented for 30 days or less. Rental vehicles subject to the tax include automobiles, vans, SUVs, trucks rated at one ton or less, trucks or trailers with a gross vehicle weight under 22,000 pounds, motorcycles, quadricycles, off-highway vehicles, motorboats, and sailboats. Vehicles designed to carry more than 15 passengers, farm vehicles, machinery, equipment, and vehicles rented with a driver are not subject to the tax.

Source: Mont. Code Ann. § 15-68-102

Persons who wish to engage in business within Montana that is subject to the rental vehicle sales and use tax must obtain a seller's permit before engaging in business. The Montana Department of Revenue issues a separate numbered permit for each location in which the person maintains an office or place of business within Montana.

The permit is valid until revoked or suspended but is not assignable. A permit is valid only for the person in whose name it is issued and for the transaction of business at the place designated. The permit must be conspicuously displayed at all times at the place for which it is issued.

Source: Mont. Code Ann. § 15-68-401

## Filing frequency and due dates

Rental vehicle sales and use tax returns must be filed quarterly. On or before the last day of the month following the calendar quarter in which the transaction subject to the tax occurred, a return on a form provided by the department and payment of the tax for the preceding quarter must be filed with the department.

Each person engaged in business within Montana or using property or services within Montana that are subject to tax under Chapter 68 (which includes rental vehicle tax) must file a return. A person making rental vehicle sales at two or more places of business must file a separate return for each separate place of business.

The quarterly due dates are:

• Q1 (January–March): Due April 30
• Q2 (April–June): Due July 31
• Q3 (July–September): Due October 31
• Q4 (October–December): Due January 31

An exception exists for persons issued a seasonal seller's permit, who must file a return and pay the tax on the date or dates set by the department. The department may adopt rules providing for seasonal permits for accommodations and rental vehicles.

Pursuant to rules established by the department, returns may be computer-generated and electronically filed.

Source: Mont. Code Ann. § 15-68-502

## Vendor allowance

A person filing a timely return under § 15-68-502 may claim a quarterly vendor allowance for each permitted location in the amount of 5% of the tax determined to be payable to the state. The allowance may be deducted on the return.

A person that files a return or payment after the due date for the return or payment may not claim a vendor allowance. The vendor allowance is available only when both the return and payment are filed timely.

Source: Mont. Code Ann. § 15-68-510