According to the Montana website, your active duty pay is not taxable in Montana.
How do I enter the exclusion if I am a Montana resident?
If you are a resident of Montana, you can exclude the military pay by following these steps in the program:
- State Section
- Edit Montana Resident Return
- Subtractions From Income
- Enter amount in the box labeled "Exempt military salary of residents on active duty"
- Continue to save
What if I am a nonresident of Montana?
If you are a nonresident of Montana, you can exclude your military income by following these steps:
- State Section
- Edit Montana Nonresident Return
- Select Nonresident Part Year Income
- Wages that are exempt from MT - Military salary of residents on active duty or exempt income of nonresident military servicepersons and their spouses.
- Save
What if my spouse and I have different residency status?
Starting tax year 2024: Married taxpayers can no longer file separately from their spouses unless they are filing separately for federal purposes. To indicate your spouse is a part-year or nonresident, edit your Montana return and select Basic Information. Next, choose "Yes" for "Is one spouse a MT Resident and the other spouse is a nonresident or part-year resident?"
Prior to 2024: If one spouse is a resident of Montana and the other is not, you should file separate state returns. To do this within program, you can file the federal return and wait for the return to be accepted. Then, change the filing status for the primary taxpayer and file a separate return for the first spouse. The second spouse will need to create a new account and file a separate return in that account.