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Summary of differences between federal and state regulations
Income tax withholding
Individuals who earn wages by performing services in Montana are liable for Montana income tax. As an employer, it is your duty by law is to deduct the tax from the wages you pay. Every employer who resides in Montana and every non-resident employer who pays wages for services performed in Montana must withhold Montana income tax. This money belongs to the employee and is only held, in trust, by the employer until paid to the state. Withholding should not be used by the employer to operate the employer's business.
The amount of tax you withhold from an employee's pay depends on three factors:
(1) length of your payroll period,
(2) gross pay, and
(3) number of withholding allowances claimed on W-4 forms.
The remittance schedule for withholding taxes is established annually by the department. On or before November 1 of each year, the department will notify the employers of their remittance schedules for the following calendar year based upon the department's review of the preceding lookback period. The lookback letter will not be sent to employers whose remittance frequency for the next calendar year remains the same.
Montana has a reciprocal agreement with North Dakota. Employers are not required to deduct Montana state income tax withholding on wages earned by residents of North Dakota under the provisions of the Income Tax and Withholding Tax Reciprocal Agreement between Montana and North Dakota.
Unemployment taxesAll states finance UC primarily through contributions from subject employers on the wages of their covered workers. In addition, three states (Alaska, New Jersey, and Pennsylvania) collect contributions from employees. These taxes are deposited by the state to its account in the UTF in the Federal Treasury, and are withdrawn as needed to pay benefits.
Many states have adopted a higher tax base than what is provided in FUTA. Hawaii's wage base is usually higher and changes periodically. In all states, an employer pays a tax on wages paid to each worker within a calendar year up to the amount specified in state law. In addition, most of the states provide an automatic adjustment of the wage base if federal law is amended to apply to a higher wage base than that specified under state law. As a result of the many variables in states taxable wage bases and rates, benefit formulas, and economic conditions, actual tax rates vary greatly among the states and among individual employers within a state.
Wages subject to unemployment tax in this state equal $21,000.
Minimum and maximum rates in this state are 0.13 and 6.50 %. Rates apply to experience rated employers only and do not include applicable surtaxes or penalties.
State
Contacts
Income tax withholdingDepartment of Revenue
Unemployment taxesDepartment of Labor and Industry
Regulations
Income tax withholding42, Chapter 17 Business Tax; Sub-Chapter 1 General Withholding http://www.mtrules.org/gateway/ChapterHome.asp?Chapter=42.17
Unemployment taxesAdministrative Rules Of Montana, Chapter 24http://www.mtrules.org/gateway/ChapterHome.asp?Chapter=24.11