Live in Idaho, Work in Montana: Which State Taxes Your Paycheck?
Answer
Both states tax the same wages, and a credit undoes the overlap. Montana withholds as your work state and you file a Montana nonresident return; Idaho taxes residents on all income, so you also file at home and claim the credit for tax paid to Montana. File Montana first.
Last verified
Two states can lawfully tax the same wages: Montana because the work happened there, Idaho because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the Idaho return, through the credit for taxes paid to another state.
A Idaho resident taxed by another state on the same income claims the credit for taxes paid to other states on Form 39NR. The credit is capped at the Idaho tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.
What you file
- 1Nonresident return · MontanaForm 2 with the nonresident/part-year schedule
File the Montana nonresident return FIRST — you need the Montana tax figure before you can complete Idaho.
- 2Resident return · IdahoForm 39NR
File a Idaho resident return reporting all income, then claim the credit for tax paid to Montana. The credit is capped at what Idaho would have charged on that same income, so if Montana taxes it at a higher rate the difference is not refunded.
The two states, side by side
| Idaho | Montana | |
|---|---|---|
| Taxes wages | Yes — flat | Yes — graduated |
| Reciprocity partners | None | 1 (Form MW-4) |
| Convenience rule | No | No |
| Nonresident return | Form 43 | Form 2 with the nonresident/part-year schedule |
| Credit for other-state tax | Form 39NR | Form 2 (credit for income tax paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | Idaho State Tax Commission | Montana Department of Revenue |
| Last verified |
The other direction
Reversing the commute does not always reverse the answer. Living in Montana and working in Idaho gives:Both states — credit offsets the double tax.
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.
- Remote worker: Idaho → MontanaHome state only
- 1099 contractor: Idaho → MontanaHome state, plus the client state if you work there
- Moved mid-year: Idaho → MontanaTwo part-year returns
Other Idaho pairs
Questions people actually ask
I live in Idaho and work in Montana. Which state takes the tax out of my paycheck?
Both states tax the same wages, and a credit undoes the overlap. Montana withholds as your work state and you file a Montana nonresident return; Idaho taxes residents on all income, so you also file at home and claim the credit for tax paid to Montana. File Montana first.
Which state should my employer be withholding for?
Montana. The wages are sourced to Montana, so Montana withholding is correct and there is no Idaho withholding to set up.
Will I end up paying tax twice on the same income?
Not twice over, but you will pay the higher of the two rates. Idaho gives residents a credit for tax paid to Montana on the same income, claimed on Form 39NR. The credit is capped at the Idaho tax on that income, so if Montana taxes it more heavily the excess is not refunded by either state.
How current is this?
The Idaho and Montana rules on this page were last checked against Idaho State Tax Commission 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.
- Idaho State Tax Commission — individual income taxaccessed 2026-08-07
- Montana Department of Revenue — individual income taxaccessed 2026-08-07