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Montana Estate Tax Rules
Support GuideMontana21 min read

Montana Estate Tax Rules

Montana has no estate tax for deaths after 2004 and no inheritance tax. Only the federal estate tax applies, above $15 million for a 2026 death.

By Settled Editorial

Montana has no estate tax for deaths after 2004 and no inheritance tax for deaths after January 1, 2001. The only death tax that can reach a Montana estate is the federal estate tax, which for a 2026 death starts above $15,000,000 of gross estate plus lifetime taxable gifts. Most Montana families owe none of it.

This page covers three things: why the Montana estate tax sections are still in the code but collect nothing, how the federal tax works for a Montana estate, and the Montana rules in Title 72, Chapter 16, Part 6 that decide who pays if a federal bill does arrive. It also covers the tax Montana does charge an estate, which is an income tax on Form FID-3. The basis reset on inherited property is a separate income tax question with its own page on the step-up in basis. To test one estate against the federal exemption, the Montana estate tax page runs the numbers.

What the Montana Department of Revenue Says

The department's estate and inheritance tax page answers the question in its first line: "Montana no longer collects estate or inheritance taxes."

Here is the rest, quoted from the same page:

  • Inheritance tax. Montana's inheritance tax "was repealed in November 2000 and does not apply to any death after January 1, 2001."
  • Estate tax. "Montana does not have an estate tax for deaths after 2004."
  • Releases and waivers. "Montana no longer has a requirement for requesting a certificate or consent from the department to close probate, or to transfer stocks, bonds, or other securities."

That last point matters at the bank counter. No Montana tax waiver exists to ask for, and a transfer agent cannot hold up a stock transfer waiting for one.

The page also covers older deaths. If the person died before January 1, 2001 and a tax may be due, the department asks you to contact it for Form INH-2. If the death fell after December 31, 2000 and before January 1, 2005 and a federal Form 706 was filed, it asks you to contact it for Form INH-4. MCA 72-16-906 matches that window: it requires a duplicate of the federal estate tax return to be filed with the department only for a decedent "who died prior to January 1, 2005."

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Why the Estate Tax Sections Are Still in the Code

Open Title 72, Chapter 16, Part 9 of the Montana Code Annotated 2025 and you will find live sections, not repealed ones. This is the detail that trips up people who search the code on their own.

  • MCA 72-16-904, "Estate tax imposed," imposes an estate tax on the transfer of every estate that is subject to the federal estate tax and has, in whole or in part, a taxable situs in Montana.
  • MCA 72-16-905, "Estate tax -- how computed," sets that tax equal to "the maximum tax credit allowable for state death taxes against the federal estate tax," prorated to the part of the estate with Montana situs.
  • MCA 72-16-901 states the purpose: to obtain for Montana the benefit of that federal credit.

So the Montana tax was always a share of a federal credit, never a tax of its own. The credit lived in Internal Revenue Code Section 2011. Congress repealed Section 2011 in Public Law 113-295, effective December 19, 2014. A tax defined as the maximum allowable credit comes to zero when no credit is allowable, and the Department of Revenue treats every death after 2004 that way.

The accurate way to say it: Montana has no estate tax for deaths after 2004. The sections themselves were never repealed.

The Tax Montana Does Charge an Estate: Form FID-3

Montana taxes what an estate earns, not what it is worth. This is the return most Montana estates actually file.

The department's filing requirements page says that beginning with tax year 2024, resident estates and trusts must file the Montana Income Tax Return for Estates and Trusts, Form FID-3, if they have a federal filing requirement or have positive Montana taxable income after Montana additions to federal taxable income. A nonresident estate files if it has any Montana source income or Montana resident beneficiaries.

Three details from the same page:

  1. Residency follows the decedent. An estate is a resident estate if the decedent was a Montana resident on the date of death.
  2. Due dates. A calendar year return is due April 15. A fiscal year return is due the 15th day of the 4th month after the year ends.
  3. Extension to file, not to pay. An estate receives an automatic six month extension to file with no application. Any tax still has to be paid by the original due date or it draws penalties and interest.

The fiduciary also gives each beneficiary a Montana Schedule K-1 (FID-3), and the beneficiaries report that income on their own Montana returns. An estate that holds a rental in Billings for a year and collects rent will usually have a FID-3 to file. None of this has anything to do with the federal estate tax.

The Federal Number for a 2026 Death

IRC Section 2010(c)(3)(A) sets the exclusion at $15,000,000. The IRS says the Working Families Tax Cuts bill, signed July 4, 2025 as Public Law 119-21, amended Section 2010(c)(3) to reach that figure for calendar year 2026.

The IRS publishes the filing threshold by year of death:

Year of deathFiling threshold
2024$13,610,000
2025$13,990,000
2026$15,000,000

The IRS says a return is required if "the gross estate of the decedent, increased by the decedent's adjusted taxable gifts and specific gift tax exemption," is valued at more than the threshold for the year of death. That is a federal measure. It counts far more than the property that goes through a Montana court.

Above the threshold, the rate table in IRC Section 2001(c) tops out at $345,800 plus 40 percent of the excess over $1,000,000 of taxable transfers. For deaths after 2026, Section 2010(c)(3)(B) adjusts the $15,000,000 figure for inflation using calendar year 2025 as the base, rounded to the nearest $10,000. Check the IRS table for the year of death rather than trusting a figure quoted in an older article.

Why the Federal Measure Is Bigger Than a Montana Probate Estate

The tools Montana families use to skip probate are the same ones that make the gross estate larger than the court file.

  • A recorded transfer on death deed. MCA 72-6-411 says that during the owner's life the deed does not affect the owner's right to transfer or encumber the property and does not create a legal or equitable interest in the beneficiary. The owner still owns the land at death, so it counts in the gross estate. The Montana transfer on death deed guide covers recording.
  • Payable on death and beneficiary accounts. They skip probate and still count here.
  • Spousal joint tenancy. Under IRC Section 2040(b), where spouses hold property as joint tenants with right of survivorship and are the only joint tenants, one half of the value goes into the first spouse's gross estate.
  • Life insurance and retirement accounts the decedent owned. Ownership drives inclusion, not the beneficiary name.

Montana's small estate figure is a different kind of number. MCA 72-3-1101(1)(a) lets a successor collect personal property by affidavit when "the value of the probate estate, wherever located, less liens and encumbrances, does not exceed $100,000." That is a court process test. It says nothing about a federal return. The Montana small estate affidavit guide explains what it does cover.

Deductions That Settle It for Most Families

  • The marital deduction. Property left to a surviving spouse who is a United States citizen passes free of federal estate tax with no dollar cap. IRC Section 2056(d) disallows that deduction, and turns off the Section 2040(b) half rule, when the surviving spouse is not a citizen, unless the property passes into a qualified domestic trust.
  • The charitable deduction. Gifts to a qualified charity come off the top.
  • Debts, funeral costs, and administration expenses also reduce the taxable estate.

Who Pays the Bill: MCA 72-16-601 to 72-16-612

If a federal estate tax is due, Montana law decides whose share of the estate it comes out of. National estate tax pages rarely mention this part.

MCA 72-16-601(6) defines "tax" as the federal estate tax and any additional inheritance, estate, or death taxes imposed by any state, plus interest and penalties. Section 601(4) defines a "person interested in the estate" as anyone entitled to receive, or who has received, property included in the decedent's estate, and it includes a personal representative, conservator, and trustee.

The default rule is MCA 72-16-603:

  • (1) Unless the will or governing instrument provides otherwise, the tax is apportioned among all persons interested in the estate, in proportion to the value of each person's interest. The values used to figure the tax are the values used to split it.
  • (2) If the will or governing instrument directs a different method, that method controls.
  • (3) If federal law sets different liabilities, federal law controls.

Put 601(4) and 603(1) together. A transfer on death deed beneficiary, a payable on death account holder, and a life insurance beneficiary are all persons interested in the estate, even though none of those assets go through probate. Each can receive an apportioned share of the bill.

The rest of Part 6 tells the personal representative how to collect:

  1. Withhold before you distribute. MCA 72-16-608(1) lets the personal representative withhold from any property distributable to a person interested in the estate the tax attributable to that person's interest. Subsections (2) and (3) allow recovery of a shortfall, or of the whole share from someone whose property the representative never held.
  2. Take security for an early distribution. MCA 72-16-605 says a distributee who receives property before final apportionment shall post a bond or other security in the form and amount the personal representative prescribes.
  3. Deductions follow the gift. MCA 72-16-607(2) gives the benefit of an exemption or deduction allowed because of a relationship to the decedent, or because of the purpose of a gift, to the person with that relationship or receiving that gift. A spouse's or a charity's share does not carry tax it did not cause.
  4. No split between life estate and remainder. MCA 72-16-606 charges the tax on a temporary interest, such as a life estate, and on the remainder against the principal of the property, with no apportionment between them.
  5. The collection clock. MCA 72-16-610 says no one has a duty to sue a person interested in the estate for an apportioned share until 3 months after the tax is finally determined. A share that turns out to be uncollectible is equitably apportioned among the others.
  6. The court can step in. MCA 72-16-602 lets the court where venue lies for administration determine the apportionment on petition, and 72-16-611 makes that determination prima facie correct in a later collection suit. MCA 72-16-609 lets the court charge the personal representative with penalties and interest caused by the representative's own negligent delay.

MCA 72-16-612 covers the cross-border case. A personal representative acting in another state may sue in Montana to recover a proportionate share of the federal estate tax, or of another state's estate tax or death duty, from a person interested in the estate who is domiciled in Montana or owns Montana property subject to attachment or execution.

Two other Montana sections put estate taxes into the probate sequence. MCA 72-3-807(1)(c) ranks "federal estate and Montana state estate taxes" third in the order of payment when the estate cannot pay every claim, after administration costs and funeral and last-illness expenses. And the closing statement under MCA 72-3-1004(1)(b) has the personal representative swear that estate and other death taxes were paid or disposed of. The Montana creditor claims guide covers the full claim order.

Portability, and the Return a Small Estate May Still Want

When the first spouse dies, the unused part of that spouse's exclusion can pass to the survivor. IRC Section 2010(c)(4) defines this deceased spousal unused exclusion amount, the DSUE, as the lesser of the $15,000,000 figure or the excess of the last deceased spouse's applicable exclusion over the amount the tentative tax was computed on. It comes from the last deceased spouse only.

The catch is Section 2010(c)(5)(A). The survivor gets the DSUE only if the executor of the first spouse's estate files an estate tax return computing it and makes the election on that return. The election is irrevocable, and no election may be made on a return filed after its due date, including extensions.

So a Montana family nowhere near $15,000,000 may still file Form 706 at the first death, purely to lock in the survivor's larger exclusion. If that deadline has passed and the estate had no filing requirement, the IRS says Revenue Procedure 2022-32 allows a complete return filed on or before the fifth anniversary of the death, marked at the top "FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(c)(5)(A)." No user fee applies.

Two Clocks That Do Not Match

Federal Form 706 is due nine months after the date of death. The IRS says any estate, including one filing only to elect portability, can get an automatic six month extension to file by submitting Form 4768 on or before the due date.

Montana's own probate calendar runs on different dates, and none of them move the federal one. A personal representative has 9 months after appointment to prepare the inventory under MCA 72-3-607(1), and appointment can come weeks or months after the death. If you wait for the Montana inventory deadline before starting on Form 706, the federal return may already be late.

The Montana inventory still helps. MCA 72-3-607(1) and (2) require the fair market value of each item "as of the date of the decedent's death," which is the same date of death value the federal schedules use, and 72-3-607(2) lets the personal representative hire a qualified, disinterested appraiser for any asset whose value is in doubt. Section 607(5) also lets the representative prepare a list of both probate and nonprobate property, which is a head start on a gross estate total. The Montana probate timeline lays out the rest of the calendar, and the personal representative's tax duties sit alongside the other jobs that appointment starts.

What a Montana Family Should Do

  1. Add up the estate the federal way. Include the house, land held by transfer on death deed, life insurance the decedent owned, retirement accounts, and anything with a beneficiary form. If the total is far below $15,000,000 for a 2026 death, no federal estate tax applies and no Form 706 is required.
  2. If a spouse died, look at portability first. It is the main reason a modest estate files a 706. Revenue Procedure 2022-32 gives five years to fix a missed election when there was no filing requirement.
  3. Skip the Montana estate tax return and waiver. Neither exists for a death after 2004.
  4. File the income tax returns. The final Form 1040 and Montana individual return for the year of death, and Form 1041 with Montana Form FID-3 for estate income, are the returns most Montana estates actually owe.
  5. Read the will before you distribute. A tax clause controls under MCA 72-16-603(2). Without one, the default reaches nonprobate beneficiaries, and 72-16-605 and 72-16-608 let you take security or hold back.
  6. Bring in help when the facts are hard. A ranch or business interest, a noncitizen spouse, property in a state that still taxes estates, or a gross estate near the threshold are the cases where a CPA and a Montana estate attorney earn their fee.

The Montana probate guide covers the court side, and Montana surviving spouse rights covers what the spouse can claim before any of this.

Frequently Asked Questions

Does Montana have an estate tax?

Not for anyone who died after 2004. The Montana Department of Revenue says Montana does not have an estate tax for deaths after 2004 and no longer collects estate or inheritance taxes. The estate tax sections are still printed in the code: MCA 72-16-904 imposes a tax on estates subject to the federal estate tax, and 72-16-905 sets that tax equal to the maximum federal credit for state death taxes. That federal credit is gone, and Congress repealed the section that granted it, IRC 2011, in 2014. A Montana tax measured by a credit that no longer exists comes to zero.

Does Montana have an inheritance tax?

No. The Montana Department of Revenue says the inheritance tax was repealed in November 2000 and does not apply to any death after January 1, 2001. Heirs file nothing with the state on what they receive. For an older death, the department asks you to contact it for Form INH-2, the Application for Determination of Inheritance Tax.

Do I need a Montana tax release or consent to close probate or transfer stock?

No. The Montana Department of Revenue says Montana no longer requires a certificate or consent from the department to close probate, or to transfer stocks, bonds, or other securities. A bank or transfer agent that asks for a Montana tax waiver is asking for a document the state no longer issues.

How large does a Montana estate have to be before federal estate tax applies?

For a death in 2026 the federal exclusion is $15,000,000 per person. IRC 2010(c)(3)(A) sets that figure, and Public Law 119-21, signed July 4, 2025, put it there. The IRS filing threshold table shows $13,610,000 for 2024, $13,990,000 for 2025 and $15,000,000 for 2026. The measure is the gross estate plus adjusted taxable gifts and specific gift tax exemption, which is often larger than the Montana probate estate.

Who pays the federal estate tax out of a Montana estate?

Unless the will or other governing instrument says otherwise, MCA 72-16-603(1) apportions the tax among all persons interested in the estate, in proportion to the value each one receives. MCA 72-16-601(4) defines a person interested in the estate as anyone who receives property included in the decedent's estate, so a transfer on death deed beneficiary or a payable on death account holder can owe a share. A will that directs a different method controls under 72-16-603(2).

Does a Montana estate file a state income tax return?

Often, yes. The Montana Department of Revenue says that beginning with tax year 2024, a resident estate must file the Montana Income Tax Return for Estates and Trusts, Form FID-3, if it has a federal filing requirement or positive Montana taxable income after Montana additions. An estate is a resident estate if the decedent was a Montana resident on the date of death. A calendar year return is due April 15, with an automatic six month extension to file that does not extend the time to pay.

Related Montana Guides

This guide is general information about Montana estates and federal transfer taxes. Federal figures change every January and apportionment turns on the words of the will, so confirm anything that affects your situation with a CPA or a licensed Montana attorney.

Sources:

It is not legal advice.

Information current as of September 27, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in Montana can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.

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