Live in Montana, Work Remotely for a New Mexico Employer: Who Taxes You?
Answer
Your home state takes it and the work state does not. New Mexico 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
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. Montana reaches all of a resident's income, and New Mexico adds nothing on top.
What you file
- 1Resident return · Montana
File a Montana resident return reporting all of your income.
The two states, side by side
| Montana | New Mexico | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | 1 (Form MW-4) | None |
| Convenience rule | No | No |
| Nonresident return | Form 2 with the nonresident/part-year schedule | Form PIT-1 with Schedule PIT-B |
| Credit for other-state tax | Form 2 (credit for income tax paid to another state) | Form PIT-1 (credit for taxes paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Montana Department of Revenue | New Mexico Taxation and Revenue Department |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in New Mexico 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 → New MexicoBoth states — credit offsets the double tax
- 1099 contractor: Montana → New MexicoHome state, plus the client state if you work there
- Moved mid-year: Montana → New MexicoTwo part-year returns
Other Montana pairs
Questions people actually ask
I live in Montana and work remotely for a New Mexico employer. Which state do I pay?
Your home state takes it and the work state does not. New Mexico 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 New Mexico tax on these wages. If a New Mexico line is showing on your pay stub, raise it with payroll now rather than at filing time.
Does my New Mexico employer's location alone create a New Mexico tax obligation?
No. New Mexico 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 New Mexico are a different matter — those are New Mexico-source income and can require a nonresident return.
How current is this?
The Montana and New Mexico rules on this page were last checked against Montana Department of Revenue and New Mexico Taxation and Revenue Department 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
- New Mexico Taxation and Revenue Department — individual income taxaccessed 2026-08-07