Live in South Dakota, Work Remotely for a Montana Employer: Who Taxes You?
Answer
No state taxes your wages. You perform the work in South Dakota, which levies no personal income tax, and Montana has no convenience-of-the-employer rule that could reach across the line at you. The employer's address in Montana creates no Montana liability on its own.
Last verified
Wages are sourced to the place where the work is physically performed. That default is what makes remote work simple, and it is only disturbed when the employer's state runs a convenience-of-the-employer rule. Montana does not.
What you file
There is nothing to file in either South Dakota or Montana on these wages. Your federal return is unaffected — the federal government taxes the income whatever the states do.
The two states, side by side
| South Dakota | Montana | |
|---|---|---|
| Taxes wages | No | Yes — graduated |
| Reciprocity partners | None | 1 (Form MW-4) |
| Convenience rule | No | No |
| Nonresident return | Not applicable | Form 2 with the nonresident/part-year schedule |
| Credit for other-state tax | No income tax | Form 2 (credit for income tax paid to another state) |
| Nonresident safe harbour | Not applicable | None published |
| Local income tax | No | No |
| Revenue department | South Dakota Department of Revenue | Montana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Montana and working in South Dakota 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: South Dakota → MontanaWork state only
- 1099 contractor: South Dakota → MontanaClient state only, if you work there
- Moved mid-year: South Dakota → MontanaOne part-year return — the state you moved to
Other South Dakota pairs
Questions people actually ask
I live in South Dakota and work remotely for a Montana employer. Which state do I pay?
No state taxes your wages. You perform the work in South Dakota, which levies no personal income tax, and Montana has no convenience-of-the-employer rule that could reach across the line at you. The employer's address in Montana creates no Montana liability on its own.
Which state should my employer be withholding for?
Neither. There is no state income tax to withhold on either side of this pairing, so a state line on your pay stub for South Dakota or Montana is an error worth querying.
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 South Dakota and Montana rules on this page were last checked against South Dakota Department of Revenue 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.
- South Dakota Department of Revenue — individual income taxaccessed 2026-08-07
- Montana Department of Revenue — individual income taxaccessed 2026-08-07