As of January 1, 2026, Montana’s minimum wage is $10.85 per hour — a $0.30 increase from the previous year. Because the state adjusts this rate annually for inflation, employers must stay on top of these changes to keep their team paid accurately and their business fully compliant.
What you’ll learn
What you’ll learn
Key takeaways
- The Montana state minimum wage adjusted upwards to $10.85 per hour on January 1, 2026 and was $10.55 per hour in 2025
- Tipped employees in Montana must earn at least the standard state minimum wage when tips are included as tip credit is not allowed in the state of Montana
- The Montana minimum wage is updated annually based on the Consumer Price Index as determined by Montana state government legislation
- Businesses in Montana are responsible for updating payroll systems and processes to reflect ongoing changes in the minimum wage rate
- Automated payroll software can help streamline minimum wage updates, tax filings, and other changes to payroll while ensuring accuracy and timeliness
This guide breaks down how Montana’s minimum wage works, rules for tipped employees, who qualifies for exemptions, and the steps you can take to keep your payroll running smoothly and penalty-free.
Montana minimum wage standard rates for 2026
Montana’s minimum wage is $10.85 per hour in 2026, up from $10.55 per hour in 2025. The state’s minimum wage rate adjusts annually based on the Consumer Price Index.
The current state minimum wage exceeds the federal minimum wage of $7.25 per hour, and Montana businesses are required to pay the higher state rate in accordance with the Department of Labor’s Fair Labor Standards Act. State minimum wages can vary significantly from state to state, and your business is required to stay on top of ongoing changes to minimum wage rates, whether you do business in one state or many.
Montana minimum wage for tipped employees
In Montana, tipped employees must be paid the full state minimum wage of $10.85 per hour. You cannot pay tipped employees a lower hourly rate and use a tip credit to equal minimum wage in Montana. Tipped employees in Montana also keep all their tips on top of this full hourly wage. In addition, tipped employees who work more than 40 hours in a work week must receive 1.5 times the regular rate for overtime pay.
In essence, tipped employees in Montana are treated similarly to non-tipped employees when it comes to the minimum wage.
Exceptions for small businesses and trainees
If your small business makes less than $110,000 in annual sales, you are allowed to pay a minimum wage of $4 per hour for employees who are not covered by the Fair Standards Labor Act. However, if any of your employees produce or move goods between states, you must pay them the higher Montana minimum wage.
Other exceptions to Montana’s minimum wage include students, domestic care workers, family members, and volunteers. Montana does not have a training wage for new hires. They must be paid $10.85 per hour unless they meet one of the state’s exceptions to the rule.
You can check with the state labor office if you have questions on employee eligibility or state minimum wage law and exceptions.
Annual cost-of-living adjustments
The Montana minimum wage adjusts annually based on the Consumer Price Index, which measures the average change over time in the prices paid by urban consumers for various goods and services. Your small business is required to monitor and adapt to these annual cost-of-living adjustments to remain compliant with state and federal law.
A living wage in Montana, defined as the acceptable amount an individual must make to support themselves or their family, is $24.32 per hour for a single adult with no children, $44.45 per hour for two adults (one working) with two children, and $29.98 for two working adults with two children.
Annual cost-of-living adjustments are designed to bring Montana’s minimum-wage workers closer to a living wage and support affordability.
Payroll considerations for Montana employers
Your Montana business should pay attention to the following key payroll considerations:
- Payroll software can save time and prevents errors: Consider adopting automated payroll software to streamline ongoing wage updates, exemptions, and tipped employee calculations. You can also use a Montana hourly pay calculator to accurately track payroll for your hourly team members in Montana.
- Keep excellent records: Your business must maintain thorough and accurate payroll records, which include hourly pay for minimum-wage workers, working hours, overtime pay, premium pay, and total wages. You should maintain payroll records for a minimum of three years.
- Audit, audit, audit: Regularly audit your payroll systems to make sure that they remain in compliance with current wage laws. When needed, make prompt adjustments to out-of-compliance payroll systems. Audits can pinpoint errors and needed updates and keep your payroll team on track.
- Stay tuned to federal and state payroll updates: As pay rates and wage regulations evolve from state to state and year to year, it’s critical to stay on top of potential changes that will affect your business and your payroll. Make sure your business follows both local and national payroll updates and regulations.
It’s also important to communicate ongoing payroll updates to your team members so they’re never surprised when an update or a change in process occurs.
Enforcement and penalties
Your business can face both fines and penalties for noncompliance with the state minimum wage laws.
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The state’s Wage Payment Act says that:
- Businesses may pay a penalty of up to 110 percent on employee wages that are not paid or not paid properly.
- Contracts between employers and employees that fail to comply with state laws will be voided.
- Your business may be responsible for attorney fees, court costs, and interest on unpaid worker wages.
The most common violations when it comes to minimum wage payments and payroll include late or missed payments, miscalculations in payroll, and improper withholdings.
How to stay ahead of wage changes in Montana
Between tracking Montana’s annual cost-of-living adjustments and ensuring tipped workers receive the full minimum wage without tip credits, keeping your payroll compliant requires close attention. Keeping up with these regulations is critical to protecting your business from penalties like paying up to 110 percent on improperly paid wages.
Fortunately, compliance doesn’t have to be a headache. A dependable payroll platform like OnPay empowers you to handle the heavy lifting. From making it easy to adjust your team’s pay rates as the state minimum wage rises to managing your tax filings, we give you the tools you need to run error-free payroll. This means you can spend less time on paperwork and more time running your business in the Treasure State. If you have any questions, our team is here to help!
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.