Effective for tax years starting on or after Jan. 1, 2024, employers are not required to withhold Montana state income tax from nonresident employee wages earned for work within the state until an employee spends more than 30 days performing work for the employer in Montana.
The details:
Currently, all compensation paid to nonresident employees regardless of days worked in Montana is subject to income tax withholding.
Under the revised law, the number of days a nonresident employee is considered present in Montana includes all days the nonresident employee is present and performing employment duties on behalf of the employer.
Exceptions: The 30-day nonresident employee withholding threshold does not apply to wages received by professional athletes, professional entertainers, or people “of prominence” who perform services for pay on a per-event basis. In addition, construction workers who perform services to improve real property on constructions sites, production employees and “key employees” are also excluded from the 30-day threshold.
"Key employee" means an individual who, for the year immediately preceding the current tax year, had annual compensation from the employer of greater than $500,000.
Next steps:
Montana employers who have nonresident employees (other than those noted in the “exceptions” above) working in Montana are not required to withhold state income tax until the nonresident employee has worked for the employer in Montana for 30 or more days.
For additional information, please see H.B. 447.
Have questions?
Please contact your dedicated ADP® Service Representative with any questions.