Live in South Carolina, Work in Montana: Which State Taxes Your Paycheck?
Answer
Expect withholding in Montana and a return in both. South Carolina and Montana hold no reciprocal agreement, so the overlap is resolved after the fact: Montana taxes the Montana-source wages, and your South Carolina resident return claims a credit for that tax against the South Carolina liability on the same income.
Last verified
Two states can lawfully tax the same wages: Montana because the work happened there, South Carolina because you live there. Nothing prevents the overlap in advance — it is unwound afterwards, on the South Carolina return, through the credit for taxes paid to another state.
A South Carolina resident taxed by another state on the same income claims the credit for taxes paid to other states on Form SC1040TC. The credit is capped at the South Carolina 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 South Carolina.
- 2Resident return · South CarolinaForm SC1040TC
File a South Carolina resident return reporting all income, then claim the credit for tax paid to Montana. The credit is capped at what South Carolina 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
| South Carolina | Montana | |
|---|---|---|
| Taxes wages | Yes — graduated | Yes — graduated |
| Reciprocity partners | None | 1 (Form MW-4) |
| Convenience rule | No | No |
| Nonresident return | Form SC1040 with Schedule NR | Form 2 with the nonresident/part-year schedule |
| Credit for other-state tax | Form SC1040TC | Form 2 (credit for income tax paid to another state) |
| Nonresident safe harbour | None published | None published |
| Local income tax | No | No |
| Revenue department | South Carolina 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 Carolina 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: South Carolina → MontanaHome state only
- 1099 contractor: South Carolina → MontanaHome state, plus the client state if you work there
- Moved mid-year: South Carolina → MontanaTwo part-year returns
Other South Carolina pairs
Questions people actually ask
I live in South Carolina and work in Montana. Which state takes the tax out of my paycheck?
Expect withholding in Montana and a return in both. South Carolina and Montana hold no reciprocal agreement, so the overlap is resolved after the fact: Montana taxes the Montana-source wages, and your South Carolina resident return claims a credit for that tax against the South Carolina liability on the same income.
Which state should my employer be withholding for?
Montana. The wages are sourced to Montana, so Montana withholding is correct and there is no South Carolina 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. South Carolina gives residents a credit for tax paid to Montana on the same income, claimed on Form SC1040TC. The credit is capped at the South Carolina tax on that income, so if Montana taxes it more heavily the excess is not refunded by either state.
How current is this?
The South Carolina and Montana rules on this page were last checked against South Carolina 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 Carolina Department of Revenue — individual income taxaccessed 2026-08-07
- Montana Department of Revenue — individual income taxaccessed 2026-08-07