Montana tips tax calculator: deductible, no tip credit

Montana does both things tipped workers want: it starts from federal taxable income, so the Schedule 1-A tips deduction reduces Montana tax, and it forbids any tip credit against the $10.85 minimum.

Your Montana tips

State where you work Qualified tips this year

Voluntary cash and card tips on your W-2, 1099 or Form 4137 — not service charges.

Tax year

2025202620272028

Filing status Other income in your AGI

Wages without the tips, plus any other income (both spouses if filing jointly).

Your occupation The 71 Treasury Tipped Occupation Codes in the final rule (TD 10044).

How you are paid

Employee (W-2) Self-employed (1099)

More options

Itemized deductions (if larger than the standard deduction)

State marginal rate override (%) Leave blank to use the state’s published rate for your bracket.

Federal income tax saved in 2026Deduction $18,000 at 12% $2,160

$18,000 of the $25,000 cap used (72%)

Qualified tips	$18,000
After the $25,000 cap	$18,000
Income phase-out (MAGI $48,000)	$0
Tips deduction	$18,000
Federal tax before → after	$3,580 → $1,420
Social Security & Medicare still due on tips	$1,377
Montana 2026: State allows the federal tips amount ($18,000, about 4.7% effective — approximate brackets)	$846
Total income tax saved	$3,006

What the estimate leaves out

In the Montana return

The 2025 Form 2 instructions say the Schedule 1-A deductions “for qualified tips, qualified overtime compensation, qualified passenger vehicle loan interest, and the enhanced deduction for seniors, are included in the calculation of Montana taxable income.” For 2025 the rate is 4.7% up to $21,100 of taxable income for a single filer and 5.9% above. For 2026, MCA 15-30-2103 widens the 4.7% band to $47,500 (single), $71,250 (head of household) and $95,000 (joint), with 5.65% above; in 2027 the band grows again and the top rate falls to 5.4%.

Montana figures

Businesses with gross sales over $110,000	$10.85 (no tip credit)
Non-FLSA businesses with sales of $110,000 or less	$4.00 (no tip credit)
In force	July 1, 2026 – December 31, 2026
Next change	after December 31, 2026 — not yet published
Tipped threshold	Not applicable — no tip credit
Tips on the 2025 return	state allows the federal tips amount. Form 2 instructions: Schedule 1-A deductions “for qualified tips … are included in the calculation of Montana taxable income.” Source: Montana Department of Revenue
Tips on the 2026 return	state allows the federal tips amount. Montana still starts from federal taxable income; no add-back was enacted. Source: Montana Department of Revenue

No credits of any kind

The Department of Labor & Industry: “No tip credit, meal credit, or training wage is allowed under Montana’s Wage & Hour Laws.” Businesses not covered by the FLSA with gross sales of $110,000 or less may pay $4.00. The minimum is adjusted by September 30 each year from August-to-August CPI, rounded to the nearest five cents; the 2027 determination had not been posted when we checked.

A Bozeman bartender

A $21,000 deduction saves $2,390 federally and about $987 in Montana at 4.7%. Thirty hours at $10.85 come to $326 before tips; the $240 of tips are on top and nothing is owed.

Check a Montana week at the full minimum

State Workweek date

Employer type or region

Hours worked this week Tips kept this week

Hourly cash wage you were paid

Leave blank to assume the legal minimum cash wage.

Employer make-up owedMontana bans tip credits: $10.85 an hour is owed before tips. $0

Minimum for the hours	$347
Cash wage paid	$347
Tips counted toward the minimum	$0
Your effective hourly pay	$15.54

How the make-up rule works

Where these figures come from

Federal rules: how the deduction works. Nearby: Idaho, Wyoming, South Dakota, North Dakota.

Figures verified against primary sources on October 5, 2026