Live in Montana, Work Remotely for a Illinois Employer: Who Taxes You?
Answer
Your home state takes it and the work state does not. Illinois levies no tax on wages; Montana taxes residents on all income regardless of where it was earned. The result is a single Montana resident return covering the full amount, with no offsetting credit.
Last verified
The instinct that working in a no-tax state means paying no tax is the single most expensive misunderstanding in this niche. Illinois takes nothing, but Montana still taxes residents on income earned anywhere, so the full amount lands on your Montana return.
What you file
- 1Resident return · Montana
File a Montana resident return reporting all of your income.
The two states, side by side
| Montana | Illinois | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — flat |
| Reciprocity partners | 1 (Form MW-4) | 4 (Form IL-W-5-NR) |
| Convenience rule | No | No |
| Nonresident return | Form 2 with the nonresident/part-year schedule | Form IL-1040 with Schedule NR |
| Credit for other-state tax | Form 2 (credit for income tax paid to another state) | Schedule CR |
| Nonresident safe harbour | None published | 30 days |
| Local income tax | No | No |
| Revenue department | Montana Department of Revenue | Illinois Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Illinois and working in Montana 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: Montana → IllinoisBoth states — credit offsets the double tax
- 1099 contractor: Montana → IllinoisHome state, plus the client state if you work there
- Moved mid-year: Montana → IllinoisTwo part-year returns
Other Montana pairs
Questions people actually ask
I live in Montana and work remotely for a Illinois employer. Which state do I pay?
Your home state takes it and the work state does not. Illinois levies no tax on wages; Montana taxes residents on all income regardless of where it was earned. The result is a single Montana resident return covering the full amount, with no offsetting credit.
Which state should my employer be withholding for?
Montana. Your employer should withhold Montana tax rather than Illinois tax on these wages. If a Illinois line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my Illinois employer's location alone create a Illinois tax obligation?
No. Illinois 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 Illinois are a different matter — those are Illinois-source income and can require a nonresident return.
How current is this?
The Montana and Illinois rules on this page were last checked against Montana Department of Revenue and Illinois 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.
- Montana Department of Revenue — individual income taxaccessed 2026-08-07
- Illinois Department of Revenue — individual income taxaccessed 2026-08-07