Montana payroll setup for your first hire

Montana takes state income tax from paychecks. A new account pays by the 15th of the next month. That file is not the unemployment report.

Montana takes state income tax from paychecks. This is not Texas, Florida, Washington, Tennessee, Nevada, South Dakota, or New Hampshire. Those states do not take state income tax from paychecks. The employer guide says every employer doing business in Montana withholds Montana tax from wages paid for services performed in Montana, unless a listed exemption applies. A federal Employee’s Withholding Certificate (Form W-4) is not the Montana certificate. New employees complete Form MW-4, the Montana Employee’s Withholding Allowance and Exemption Certificate. Keep the federal form. File a claimed Montana exemption on TAP, the TransAction Portal.

Get a federal Employer Identification Number, called EIN, from the IRS first. ARM 42.17.218 says every employer required to withhold registers for a Montana tax identification number on Form GenReg, the Montana Department of Revenue Business Registration. File it online or mail it. A shop that buys another employer’s business must not use the predecessor’s number. Registration is not complete without the federal EIN and the Social Security numbers of the owners, partners, officers, or other principals the form asks for. Failure to register does not relieve withholding, reporting, or payment. MCA 15-30-2503 makes the employer the taxpayer for the amounts that should have been withheld. Hold the withholding account number DOR assigns. A federal EIN is not that number. A Montana unemployment account number is not that number either.

The guide does not print a 15-day or 30-day registration clock. Register when the withholding duty starts. The wage-withholding payments page and MCA 15-30-2504 are the payment clock. All new withholding accounts start on the monthly schedule. Pay by the 15th day of the month after the wages. January withholding is due February 15. Later, the schedule can change with the lookback. The lookback is the 12 months from July 1 of the prior year through June 30 of the current year. Under $1,200 in that lookback can move you to an annual payment due January 31. $1,200 through $11,999 stays monthly. $12,000 or more follows the federal deposit dates. DOR says it will tell you by November 1 if next year’s schedule changes. There is no quarterly Montana withholding return. Form MW-3, the annual W-2 and 1099 reconciliation, is due January 31, with a W-2 for each employee you paid Montana wages, even if you withheld nothing. Pay on TAP or with Form MW-1, the withholding payment voucher. Do not copy North Dakota’s quarterly Form 306 onto Montana. Do not copy New Hampshire’s missing paycheck-withholding account onto Montana.

A North Dakota resident can stop Montana withholding with Form MW-4. A nonresident who works here fewer than 30 days can sit outside withholding. Those are not the unemployment test.

The North Dakota reciprocity page and ARM 42.17.134 cover one border. A North Dakota resident working in Montana can claim an exemption on Form MW-4, line 5. Give that form to the employer when hired, or when the person qualifies. The employer files it on TAP by the last day of the payroll period in which the employee turned it in. The employer guide says the exemption must be renewed annually by January 31. The rule says the certificate runs through December 31 of that exemption year. Do not hand Form MW-4’s North Dakota line to every new hire. A Montana resident working in North Dakota uses North Dakota’s Form NDW-R. That form is not this Montana file.

The same guide names a 30-day nonresident wage-withholding exemption. You do not have to withhold on a nonresident who worked in Montana for fewer than 30 days and also worked in more than one state. That person does not need Form MW-4 for this exemption. The exemption does not cover a key employee. The guide says a key employee had an annual salary of more than $500,000 in the year before the current tax year. It does not cover a person who works only in Montana. If you expect more than 30 days in Montana, start withholding when the work starts, and collect Form MW-4. This 30-day line is not a registration clock. It is not the unemployment test.

Agricultural laborers on a farm or ranch do not have a Montana wage-withholding requirement. Cannabis-industry employees are not agricultural laborers for this exemption. That withholding exemption is not an unemployment exemption. A farm that pays $20,000 in cash in a quarter, or has 10 workers on 20 different days in 20 different weeks, can still be an unemployment employer.

Unemployment starts at $1,000 in a calendar year. There is no 20-day or 30-day registration clock. Once you are covered, the year reports back to January 1.

DLI collects state unemployment tax. That tax is often called SUTA, state unemployment tax, or SUI, state unemployment insurance. Official pages say unemployment insurance tax or UI contributions. This DLI is the Montana Department of Labor and Industry. It is not North Dakota’s Job Service. It is not New Hampshire Employment Security.

MCA 39-51-202 and the employer handbook are the regular-shop test. You are a covered employer if total annual payroll in the current or preceding calendar year equals or exceeds $1,000. Total payroll is gross wages paid to all employees before deductions. One of those two years is enough. This is not the $1,500-in-a-quarter or 20-week test used in New Hampshire, North Dakota, and many other states. The handbook does not print a 20-day registration clock. It does not print a 30-day status-report clock. Register on UI eServices when you meet the test. The UI eServices page is that door. Failure to register does not relieve the tax. A shop that buys a business already subject to Montana unemployment needs a new UI account number. Do not reuse the prior owner’s number.

The handbook is the reporting clock after you cross the line. Any year you meet the covered-employer test, you report all wages paid for the entire year, back to January 1. You also report all wages paid in the next calendar year, even if that next year is under $1,000. The $1,000 test is not a permission to skip the months before you crossed it. Do not copy North Dakota’s 20-day UI EASY clock onto Montana. Do not copy New Hampshire’s 30-day Employer Status Report onto Montana. Do not copy Iowa’s 30-day myIowaUI clock. Do not copy Kansas’s 15-day Form K-CNS 010 clock. Do not copy California’s $100-in-a-quarter test. There is no 15-day California clock on the Montana handbook. Do not copy New Mexico’s $450-quarter pair. Do not copy Nevada’s $225-quarter test. Do not copy Indiana’s $1 covered-wage test. Montana does take state paycheck withholding. Do not treat Montana like a no-withholding state.

The same pages name other paths. Agricultural labor uses $20,000 in cash in a quarter, or 10 workers on 20 different days in 20 different weeks. Domestic work uses $1,000 in cash in a quarter. State and local government is covered. A shop that is not yet covered can ask the Registration Unit about voluntary coverage. Voluntary coverage cannot start in the past. If approved, it lasts at least two calendar years. This scorecard is the regular-business path.

The quarterly unemployment file sits with DLI. The withholding payment sits with DOR. They are not the same job. A new employer’s rate follows the industry, plus the Administrative Fund Tax.

Liable employers file a quarterly wage report on UI eServices. The UI-5 instructions name that file. File it even if you paid no wages while the account is active. The handbook prints the due dates. The quarter that ends March 31 is due April 30. The quarter that ends June 30 is due July 31. The quarter that ends September 30 is due October 31. The quarter that ends December 31 is due January 31. If that date is a weekend or holiday, the next business day is the due date. The employer resources page cites ARM 24.40.1609(7). Quarterly UI reports must be filed electronically. The handbook dates that electronic rule to July 1, 2025. A quarterly UI report is not Form MW-1. It is not Form MW-3. It is not the new-hire report. The offices do not share a form.

The 2026 rate explanation prints the taxable wage base as $47,300. That base is 80 percent of the 2024 average annual wage, rounded to the nearest $100. A new employer has a positive reserve and fewer than three full federal fiscal years of experience, October 1, 2022 through September 30, 2025. The rate is the average UI rate for that industry. For 2026 the explanation prints 1.30 percent for agriculture, forestry, hunting, and fishing, 1.30 percent for mining, 2.00 percent for construction, 1.00 percent for manufacturing, 1.00 percent for utilities, transportation, and warehousing, 1.00 percent for wholesale trade, 1.00 percent for retail trade, 1.00 percent for finance, insurance, and real estate, 1.10 percent for services, and 2.00 percent for an unclassified shop. New employers also pay the Administrative Fund Tax, called AFT, at 0.18 percent. AFT funds Department of Labor and Industry programs. The UI tax pays benefits. Use the industry rate and the AFT on your live DLI notice, not a number from a software page. North Dakota’s 2026 non-construction positive-balance rate is 1.00 percent on a $46,600 base. New Hampshire’s new-employer line is 2.7 percent on the first $14,000. Do not copy those rates onto Montana.

New hire is a 20-day Department of Public Health and Human Services file. The unemployment registration does not take it.

The new-hire report is a list of who you just hired. It is not a box on the quarterly UI report. It is not Form GenReg. In Montana that report goes to the New Hire Reporting Program. DPHHS is the Department of Public Health and Human Services. CSSD is the Child Support Services Division inside DPHHS. NHRP is the New Hire Reporting Program. File on the online New Hire Reporting page through Okta. Okta is the state’s login. The new-hire page, the FAQ, and MCA 40-5-922 require a written report within 20 days of the date of hire or rehire. A W-4 can carry that report. Electronic or magnetic reports may use two transmissions a month, not less than 12 days apart and not more than 16 days apart. The FAQ says report a rehire only after a separation of more than 60 days in a row. Use the rehire date as the date of hire. Do not use punctuation in an online or electronic report. The FAQ says punctuation can make the file fail.

A quarterly UI report does not satisfy that clock. Opening the withholding account does not satisfy it either. A change of federal EIN requires a new report for each employee paid under the new number. This is not West Virginia’s 14-day New Hire Reporting Center file. This is not Massachusetts’s 14-day MassTaxConnect new-hire path. This is not Alabama’s seven-day report. This is not Georgia’s 10-day report. South Dakota’s rehire gap is 30 days. Montana’s rehire gap is more than 60 days in a row.

Workplace injury insurance is due when you have any employee. Choose Plan 1, Plan 2, or Montana State Fund. Private insurers can still write the policy.

This is not North Dakota’s Workforce Safety and Insurance monopoly. It is not Washington’s exclusive state fund. It is not Ohio’s Bureau of Workers’ Compensation monopoly. It is not South Dakota’s optional coverage. It is not Texas optional coverage. It is not Georgia’s, North Carolina’s, or Virginia’s three-employee wait. It is not Florida’s or South Carolina’s four-employee wait. It is not Mississippi’s, Alabama’s, or Tennessee’s five-employee wait. Montana calls this workers’ compensation.

MCA 39-71-401 says the Workers’ Compensation Act applies to all employers and to all employees, except the listed exemptions. An employer who has any employee in service under any appointment or contract of hire shall elect compensation plan No. 1, 2, or 3, unless the extraterritorial rule in 39-71-442 applies. The Uninsured Employers Fund page says cover full-time, part-time, seasonal, and occasional workers. General liability insurance is not that policy. Health insurance is not that policy. The 2025 workers’ compensation report names the three doors. Plan 1 is approved self-insurance, alone or in an industry group, if the department accepts the finances. Plan 2 is a private insurance company. Plan 3 is Montana State Fund. MCA 39-71-2313 says the state fund must insure an employer who asks, and it may not refuse unless the employer or its principals still owe the state fund. Private carriers can choose whom they insure. Montana State Fund is the guaranteed market. It is not the only market. A payroll login is not a policy. A DOR withholding account is not a policy. A UI account is not a policy.

The same statute says a person who regularly works somewhere other than that person’s own fixed business location elects a plan, or holds an independent contractor exemption certificate from the department. Do not skip the election because a contract says contractor. A corporation or a manager-managed limited liability company covers its employees. Some corporate officers and managers can sit outside coverage unless the company elects them in. This scorecard is the regular shop that has employees. That shop elects a plan from the first employee.

How Gusto and Patriot describe Montana

Confirm the withholding account number on TAP. Confirm the UI account number and the industry rate on the DLI notice and on UI eServices. Confirm workplace injury insurance as Plan 1, Plan 2, or Montana State Fund. Confirm the 20-day new-hire file with the New Hire Reporting Program. Confirm the separate $1,000-year unemployment registration. There is no 20-day or 30-day unemployment registration clock to copy from another state.

Gusto’s Montana help article says Middesk (Gusto’s business-verification company) may register state income-tax withholding and state unemployment insurance (SUI). It names the Montana Department of Revenue for withholding and the Montana Department of Labor and Industry for unemployment tax. Those doors match the withholding page and the UI eServices page. It tells you to choose Withholding (WTH) on the TransAction Portal and to sign up on UI eServices. Those doors match Form GenReg and the handbook. The article says the withholding account number arrives in the mail in about 10 to 14 days, and the unemployment account number in about 3 to 7 days. The employer guide and the handbook do not print those day counts. Register when the duty starts. Gusto’s broader state-registration page lists Montana among the states that mail the account numbers to the business. You still send those numbers back before Gusto can file. The article asks for a Withholding Account Number and a UI Account Number. It says the UI number is seven digits and starts with 0, 1, 2, or 3. The handbook says hold the Montana UI account number. It does not print that seven-digit rule. The article says enter the Contribution Rate from the Notice of Subjectivity or Welcome Letter, and do not type the Administrative Fund Tax into that field, because Gusto adds the AFT. That split matches the 2026 rate explanation. Use the rate on your live notice. The article lists MT MW-3, MT UI-5, a state W-2, and an MT New Hire Report among files you can download, and MT MW-1 as filed electronically. Form MW-3, the UI-5 quarterly report, Form MW-1, and the new-hire report match the agency pages. Middesk’s standard order does not open Plan 1, Plan 2, or Montana State Fund. Read Gusto’s Montana help article. See Gusto on the directory.

Patriot’s registration article tells new shops to register withholding on the Montana Taxpayer Access Point and unemployment on UI eServices for Employers. Those two doors match TAP and the handbook. The official portal name is the TransAction Portal. The article says 2026 new-employer SUTA rates follow the industry classification and points you to the Department of Labor and Industry. That industry line matches the 2026 rate explanation. Use the rate on your live notice, not a number from a software page. The article says employees complete a federal Form W-4 and Form MW-4. That Montana certificate matches the employer guide. The article puts the 20-day new-hire report with the Montana Child Support Enforcement Division. The 20-day clock matches MCA 40-5-922. The live office is the Child Support Services Division and the New Hire Reporting Program. The article does not print the 60-day rehire gap. The article also says workplace injury insurance is due if you have at least one employee, through a private provider or a state-operated fund. The first-employee line matches MCA 39-71-401 for a regular shop. The two-door line covers Plan 2 and Plan 3. It leaves out Plan 1, approved self-insurance. Montana State Fund is the guaranteed market. It is not a North Dakota Workforce Safety and Insurance monopoly. Patriot’s tax-filing article says Full Service files Form UI-5 and Form UI-3 for unemployment, and Form MW-1 and Form MW-3 for withholding. The UI-5 instructions and the withholding payments page match Form UI-5, Form MW-1, and Form MW-3. Form UI-3 is what the software page says. Official UI pages name the quarterly report and the UI-5 instructions. Read Patriot’s registration article and Patriot’s Montana payroll-tax article. See Patriot on the directory.

What still sits on the employer

• Register withholding on TAP or Form GenReg when you must withhold Montana tax. Hold the withholding account number DOR assigns. Do not substitute a federal EIN for that number. Do not reuse a predecessor’s number.
• Collect Form MW-4. A federal Form W-4 does not take its place. File a claimed exemption on TAP by the last day of that payroll period. Renew an exemption by January 31.
• Pay a new withholding account by the 15th of the month after the wages. File Form MW-3 and the W-2 copies by January 31. There is no quarterly Montana withholding return.
• Use Form MW-4’s North Dakota line only for a North Dakota resident working in Montana. A nonresident under 30 days in Montana who also works in another state can sit outside withholding. A key employee paid more than $500,000 in the prior year does not.
• Register unemployment on UI eServices when total wages reach $1,000 in the current or preceding calendar year. There is no 20-day or 30-day registration clock. Hold the UI account number DLI assigns. Do not substitute a federal EIN or the withholding account number.
• After you are covered, report wages for the whole year back to January 1, and report the next calendar year even if it is under $1,000. File the quarterly UI report on UI eServices by the last day of the month after the quarter, including a zero-wage quarter while the account is active. File that report electronically.
• Enter the unemployment rate from the live DLI notice, not a marketing figure. The 2026 explanation prints industry rates from 1.00 percent to 2.00 percent, a $47,300 wage base, and a 0.18 percent Administrative Fund Tax for a new employer. Confirm the notice.
• File the 20-day new-hire report with the New Hire Reporting Program. Report a rehire after more than 60 days in a row. A quarterly UI report does not satisfy that clock. The withholding registration does not satisfy it either.
• Elect workplace injury insurance when you have any employee. Plan 1 is approved self-insurance. Plan 2 is a private carrier. Plan 3 is Montana State Fund, the guaranteed market. The Employment Relations Division does not sell the ordinary policy. Payroll software does not issue it.
• Do not copy another state’s clock onto Montana. Montana does not use California’s $100-quarter test. Montana does not use New Hampshire’s 30-day Employer Status Report. Montana does not use North Dakota’s 20-day unemployment registration. Montana does not use New Mexico’s $450-quarter test. Montana does not use Nevada’s $225-quarter test. Montana does not use Iowa’s any-wages unemployment test. Montana does not use Iowa’s 30-day myIowaUI clock. Montana does not use Kansas’s 15-day Form K-CNS 010 clock. Montana does not use Idaho’s six-month IBR clock. Montana does not use Indiana’s $1 unemployment test. Montana does not skip state paycheck withholding the way Texas, Florida, Washington, Tennessee, Nevada, South Dakota, or New Hampshire do. Montana does not use a quarterly withholding return the way North Dakota uses Form 306. Montana does not use West Virginia’s 14-day new-hire clock. Montana does not use Massachusetts’s 14-day MassTaxConnect new-hire path. Montana does not use Alabama’s seven-day new-hire clock. Montana does not use Georgia’s 10-day new-hire clock. Montana does not use South Dakota’s 30-day rehire gap. Montana does not use South Dakota’s optional workplace injury insurance. Montana does not use Texas optional coverage. Montana does not use North Dakota’s exclusive state fund. Montana does not use Washington’s exclusive state fund. Montana does not use Ohio’s Bureau of Workers’ Compensation monopoly. Montana does not use Georgia’s, North Carolina’s, or Virginia’s three-employee workplace-injury wait. Montana does not use Florida’s or South Carolina’s four-employee wait. Montana does not use Mississippi’s, Alabama’s, or Tennessee’s five-employee wait.

Related guide: How to pay tips to employees is the federal tip report. Montana still withholds state income tax on Form MW-4.

Also forming a company in Montana? Process Score compares registered agents there.