Live in Arkansas, Work Remotely for a Montana Employer: Who Taxes You?
Answer
Arkansas gets all of it. Because Montana does not tax wage income, no Montana withholding exists and no Montana return is required — but Arkansas taxes residents on worldwide income, so every dollar earned in Montana still belongs on your Arkansas resident return.
Last verified
Crossing into a state with no income tax does not lower your tax bill, because your home state is not taxing you on where you work — it is taxing you on where you live. Arkansas reaches all of a resident's income, and Montana adds nothing on top.
What you file
- 1Resident return · Arkansas
File a Arkansas resident return reporting all of your income.
The two states, side by side
| Arkansas | Montana | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | 1 (Form MW-4) |
| Convenience rule | No | No |
| Nonresident return | Form AR1000NR | Form 2 with the nonresident/part-year schedule |
| Credit for other-state tax | Form AR1000TC | Form 2 (credit for income tax paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Arkansas Department of Finance and Administration | Montana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Montana and working in Arkansas gives:Home state only.
Same two states, different situation
The withholding answer turns on how you are paid and where the work happens, not only on which two states are involved.
- W-2 commuter: Arkansas → MontanaBoth states — credit offsets the double tax
- 1099 contractor: Arkansas → MontanaHome state, plus the client state if you work there
- Moved mid-year: Arkansas → MontanaTwo part-year returns
Other Arkansas pairs
Questions people actually ask
I live in Arkansas and work remotely for a Montana employer. Which state do I pay?
Arkansas gets all of it. Because Montana does not tax wage income, no Montana withholding exists and no Montana return is required — but Arkansas taxes residents on worldwide income, so every dollar earned in Montana still belongs on your Arkansas resident return.
Which state should my employer be withholding for?
Arkansas. Your employer should withhold Arkansas tax rather than Montana tax on these wages. If a Montana line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Montana employer's location alone create a Montana tax obligation?
No. Montana sources wages to the place where the work is physically performed, and it does not apply a convenience-of-the-employer rule that would override that. Days you actually spend working inside Montana are a different matter — those are Montana-source income and can require a nonresident return.
How current is this?
The Arkansas and Montana rules on this page were last checked against Arkansas Department of Finance and Administration and Montana Department of Revenue on 2026-08-07. We re-check the full grid every December after state legislative sessions close, and re-check the convenience-of-the-employer states quarterly because that is where the rules move fastest.
Sources
Every fact above comes from the revenue department that publishes the rule. We do not cite secondary summaries, and we do not restate a figure we could not find at source.
- Arkansas Department of Finance and Administration — individual income taxaccessed 2026-08-07
- Montana Department of Revenue — individual income taxaccessed 2026-08-07