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Live in Rhode Island, Work in Montana: Which State Taxes Your Paycheck?

Both states — credit offsets the double taxMontana withholds

Answer

Montana withholds and Rhode Island credits. Without an agreement between them, both states are entitled to tax income earned in Montana by a Rhode Island resident. The mechanism that stops you paying twice is the credit on the Rhode Island resident return, which is why the Montana return has to be completed first.

Last verified

Without an agreement between Rhode Island and Montana, the overlap is handled after the fact rather than prevented. That is why the filing order matters: the Montana figure is an input to the Rhode Island return, so completing Rhode Island first means doing it twice.

A Rhode Island resident taxed by another state on the same income claims the credit for taxes paid to other states on Form RI-1040NR Schedule II. The credit is capped at the Rhode Island tax on that income, so it removes the double tax but never refunds the excess when the other state charges more.

What you file

  1. 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 Rhode Island.

  2. 2Resident return · Rhode IslandForm RI-1040NR Schedule II

    File a Rhode Island resident return reporting all income, then claim the credit for tax paid to Montana. The credit is capped at what Rhode Island 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

 Rhode IslandMontana
Taxes wagesYes — graduatedYes — graduated
Reciprocity partnersNone1 (Form MW-4)
Convenience ruleNoNo
Nonresident returnForm RI-1040NRForm 2 with the nonresident/part-year schedule
Credit for other-state taxForm RI-1040NR Schedule IIForm 2 (credit for income tax paid to another state)
Nonresident safe harbourNone publishedNone published
Local income taxNoNo
Revenue departmentRhode Island Division of TaxationMontana Department of Revenue
Last verified

The other direction

Reversing the commute does not always reverse the answer. Living in Montana and working in Rhode Island gives:Both states — credit offsets the double tax.

Montana to Rhode Island →

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.

Other Rhode Island pairs

Questions people actually ask

I live in Rhode Island and work in Montana. Which state takes the tax out of my paycheck?

Montana withholds and Rhode Island credits. Without an agreement between them, both states are entitled to tax income earned in Montana by a Rhode Island resident. The mechanism that stops you paying twice is the credit on the Rhode Island resident return, which is why the Montana return has to be completed 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 Rhode Island 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. Rhode Island gives residents a credit for tax paid to Montana on the same income, claimed on Form RI-1040NR Schedule II. The credit is capped at the Rhode Island tax on that income, so if Montana taxes it more heavily the excess is not refunded by either state.

How current is this?

The Rhode Island and Montana rules on this page were last checked against Rhode Island Division of Taxation 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.