The Short Answer
Montana excludes active-duty base, special, and incentive pay, plus Guard/Reserve pay earned on state or federal active-duty orders; other pay is taxed. Your base pay is set by the federal pay table — identical to every other state for your rank and years of service. What actually changes in Montana is your BAH (averaging $1,200/mo without dependents and $1,500/mo with dependents) and how Montana treats the taxable portion of your pay.
State tax status: ✗ TAXED
2026 Worked Example — E-5, 6 Years, With Dependents in Montana
Here is how the math actually lands for a mid-career enlisted member stationed in Montana, built the way I read my own LES. Base pay and BAS are federal; the Montana BAH figure is the state average.
| Monthly line item | Amount | Taxable? |
|---|---|---|
| Base pay (E-5, over 6 yrs) | $3,874 | Yes (federal + state) |
| BAH with dependents (Montana avg) | $1,500 | No — tax-free |
| BAS (enlisted) | $476.95 | No — tax-free |
| Gross monthly entitlements | $5,850.95 | — |
| Taxable income (base pay only) | $3,874 | — |
| Est. Montana state income tax | varies — see notes | — |
Only the $3,874 of base pay is taxable — the $1,976.95 of BAH + BAS is completely tax-free. Run your exact rank, ZIP, and dependency status in the Military Pay Calculator for a precise estimate.
How Montana Taxes Each Type of Military Pay
Active-Duty Base Pay
Montana excludes active-duty base, special, and incentive pay, plus Guard/Reserve pay earned on state or federal active-duty orders; other pay is taxed.
Guard & Reserve Drill Pay
Guard and Reserve pay earned on state or federal active-duty orders is excluded; routine drill pay treatment should be verified with the MT DOR.
Military Retirement Pay
Military retirement may receive a partial exemption based on income level; contact the Montana Department of Revenue to confirm the current amount.
VA Disability Compensation
VA disability compensation is exempt federally and is not taxed by Montana.
SCRA & Residency in Montana
A nonresident missileer at Malmstrom AFB is protected by SCRA from Montana tax on military pay.
This is the single most misunderstood rule in military pay. Your home of record / state of legal residence — not your duty station — generally determines who can tax your military pay. Changing it is a deliberate act, not something that happens automatically when you PCS.
Major Military Installations in Montana
- Malmstrom Air Force Base
- Montana Air National Guard (Great Falls)
- Fort Harrison
BAH is set by the Military Housing Area covering your duty ZIP. Verify your exact rate at the official DoD BAH lookup.
Official Sources
FAQ — Military Pay in Montana
Does Montana tax my military base pay?
Montana excludes active-duty base, special, and incentive pay, plus Guard/Reserve pay earned on state or federal active-duty orders; other pay is taxed.
Is my BAH taxed in Montana?
No. BAH is federally tax-free and is never counted as income for Montana state income tax, regardless of how Montana treats base pay.
Does Montana tax military retirement pay?
Military retirement may receive a partial exemption based on income level; contact the Montana Department of Revenue to confirm the current amount.
I'm stationed in Montana but my home of record is elsewhere — who taxes me?
A nonresident missileer at Malmstrom AFB is protected by SCRA from Montana tax on military pay.