Live in New Mexico, Work Remotely for a Montana Employer: Who Taxes You?
Answer
New Mexico taxes the income and Montana cannot. Residency, not the location of the job, drives this answer: New Mexico reaches all of a resident's income, and Montana has no personal income tax to apply to the part earned inside its borders.
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. New Mexico reaches all of a resident's income, and Montana adds nothing on top.
What you file
- 1Resident return · New Mexico
File a New Mexico resident return reporting all of your income.
The two states, side by side
| New Mexico | Montana | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | 1 (Form MW-4) |
| Convenience rule | No | No |
| Nonresident return | Form PIT-1 with Schedule PIT-B | Form 2 with the nonresident/part-year schedule |
| Credit for other-state tax | Form PIT-1 (credit for taxes paid to another state) | Form 2 (credit for income tax paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | New Mexico Taxation and Revenue Department | Montana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Montana and working in New Mexico 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: New Mexico → MontanaBoth states — credit offsets the double tax
- 1099 contractor: New Mexico → MontanaHome state, plus the client state if you work there
- Moved mid-year: New Mexico → MontanaTwo part-year returns
Other New Mexico pairs
Questions people actually ask
I live in New Mexico and work remotely for a Montana employer. Which state do I pay?
New Mexico taxes the income and Montana cannot. Residency, not the location of the job, drives this answer: New Mexico reaches all of a resident's income, and Montana has no personal income tax to apply to the part earned inside its borders.
Which state should my employer be withholding for?
New Mexico. Your employer should withhold New Mexico 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 New Mexico and Montana rules on this page were last checked against New Mexico Taxation and Revenue Department 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.
- New Mexico Taxation and Revenue Department — individual income taxaccessed 2026-08-07
- Montana Department of Revenue — individual income taxaccessed 2026-08-07