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February 16, 2021

Montana Department of Revenue confirms that teleworkers providing services in the state in 2020 due to COVID-19 are subject to income tax

The Montana Department of Revenue issued a reminder that employees are subject to Montana state income tax on wages paid to them if they resided in the state for any portion of 2020 and provided teleworker services from their Montana homes. This requirement applies to temporary work assignments within the state due to COVID-19 and even if the employee normally provides services to an employer based in another state.

Absent guidance from the Department to the contrary, this guidance also applies in 2021.

Montana income tax withholding requirements

Unless and until the Department adopts relief provisions, every employer residing in Montana and every nonresident employer transacting business in the state must withhold Montana income tax from wages paid to an employee for services rendered in Montana.

Montana state nonresident income tax withholding is also required on all wages paid for services provided within the state, unless a reciprocal agreement applies.

Montana maintains a reciprocal agreement with North Dakota. Accordingly, wages paid for services within Montana by a resident of North Dakota are exempt from Montana nonresident income tax withholding. To qualify for this exemption, North Dakota employees must complete section 2-c of Form MW-4, Montana Employee's Withholding Allowance and Exemption Certificate. (Montana Withholding Tax Guide and Tax Tables; Mont. Admin. R. Section 42.17.11.)


Contact Information
For additional information concerning this Alert, please contact:
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (
   • Debera Salam (
   • Kristie Lowery (


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