State guide · Montana · 2026 rules

S corporation in Montana: what the election changes

Montana does not tax an S corporation’s income. The change is payroll: once you elect, your salary comes under state unemployment insurance.

Updated October 24, 20267 official sources

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You’ll need: last year’s Schedule C (line 31) and the W-2 from any job you also hold. Everything else starts at a typical value you can change.

State where the business is Each state treats the election differently. The check shows only the questions that matter there.

Net profit for the year, before paying yourself Your business's profit after expenses. Money you take out for yourself does not lower it.

Where do I find this?

Schedule C, line 31 (“Net profit or (loss)”) on last year’s return.

For this year: sales minus business expenses so far, scaled to a full year. Owner draws are not an expense.

Salary you would pay yourself as an S corporation What you would pay yourself through payroll. The IRS expects a reasonable salary for the work you do.

Where do I find this?

No form shows this yet: you choose it. It should be about what you would pay someone else to do your work.

The salary finder just below shows what employees in your job earn in your state or metro area. What the IRS looks at.

Salary finder: what people in your job earn (BLS)

Your job Pick the job closest to what you do most of the week.

Area Pick your metro area if it is listed. Pay varies by area.

Another job I also earn W-2 wages from a job outside this business

Typical values: change them if you know yours

Payroll service, per year typical value Published one-person prices: $492 to $684 a year (October 2026).

Where do I find this?

Your payroll provider’s price page or quote, for one employee: you. Published prices compared.

Extra tax-prep cost for the S-corp return typical value A survey average: the fee for Form 1120-S minus the fee for Schedule C (2020 fees).

Where do I find this?

Ask your preparer what a Form 1120-S (the S corporation’s own return) would cost, then subtract what you pay now for Schedule C.

Your top federal income tax rate Not sure? Keep 22%. It changes line 5 only.

Where do I find this?

Your taxable income is on Form 1040, line 15. Find the rate for that income and your filing status in the IRS rates and brackets table.

Filing status Changes the result only above $200,000 of earnings ($250,000 if married filing jointly, $125,000 if married filing separately).

Where do I find this?

The box checked under Filing Status at the top of your Form 1040.

Choose a state and enter your profit and salary to see the comparison.

The state

Montana does not tax an S corporation’s income. A single-member LLC or sole proprietorship is not taxed at the entity level either; the owner reports the income in both cases.

Montana follows the federal S election, with no separate state form. The S corporation files Form PTE each year, due March 15 for a calendar-year business.

An LLC that elects stays an LLC under state law, so its Secretary of State annual report does not change.

Payroll taxes on your salary

Today the pay of a single-member LLC owner is exempt from Montana unemployment insurance. After the election it is covered: the law covers a member of an LLC taxed as a corporation and any corporate officer.

A new employer’s unemployment rate depends on its industry, from 1.00% to 2.00% (1.10% for services), on the first $47,300 of wages in 2026. The employer also pays the 0.18% Administrative Fund Tax on the same wages.

The optional pass-through entity tax

A one-owner S corporation can elect Montana’s pass-through entity tax, 5.65% for tax year 2026. It elects each year on Form PTE by the return’s due date, makes quarterly estimated payments, and the owner takes a refundable credit. The calculator leaves it out.

Worked examples

A single-member LLC owner, single filer, 22% federal bracket, default payroll and return costs. The figure is total tax and added costs as an S corporation compared with staying as you are.

Profit / salary	Statewide
$80,000 / $45,000	$460 lower
$120,000 / $60,000	$2,837 lower
$200,000 / $90,000	$7,618 lower

Starting payroll in Montana

Register for state withholding with the Montana Department of Revenue and for unemployment insurance with the Montana Department of Labor & Industry.

New hire paperwork for Montana

Other states

All state guides and the map

Sources

Federal figures: IRS Publication 15 (2026), Schedule SE and Form 2553 instructions. Every figure was read on an official page and checked a second time. Checked October 24, 2026. How we check facts.

An estimate from public rules, not tax advice.

Ready to elect? See the Form 2553 steps.

Electing S corp status