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
- Montana Resident Return
- Subtractions From Income
- Exempt military salary of residents on active duty
- Enter the active duty pay
- 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
- Montana Nonresident Return
- Basic Information
- Select your Filing Status - Select Married filing a Joint Return
- Save
- Select Nonresident Part Year Income
- Wages that are exempt from Montana - Military salary of residents on active duty or exempt income of nonresident military servicepersons and their spouses. Enter amount in Taxpayer box only.
- Save
What if my spouse and I have different residency status?
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.
For additional information see