Updated January 14, 2021
There’s nothing in the country like Big Sky Country. Its pull is something that out-of-staters just can’t quite understand, even if they’ve seen or heard of Yellowstone and Glacier National Parks. You know Montana inside and out. That’s why you started a small business here. But whether you own a BBQ joint in Billings or a fly shop in Helena, there is one thing that you and all the other small business owners can agree upon: you’d rather be out fishing in the dead of winter than worry about payroll taxes.
We don’t want you to worry about payroll taxes either, so we went ahead and designed a nifty payroll calculator that can figure out all of the federal and Montana state payroll taxes for you and your employees. All you have to do is input wage and W-4 information for each employee into the calculator, and it will do the rest of the work for you.
First of all, let’s give Uncle Sam his due. Here’s a quick rundown of the components that go into federal tax withholdings. For a more detailed explanation of all of the steps below, we invite you to head on over to our comprehensive step-by-step guide.
Now that we’re done with federal payroll taxes, let’s look at Montana’s state income taxes. Montana charges a progressive income tax, broken down into seven tax brackets. The 2021 tax rates range from 1% to 6.9%. Employees who make more than $18,400 will hit the highest tax bracket.
Montana doesn’t have any local taxes, so you only have to withhold for state taxes.
As an employer in Montana, you have to pay unemployment compensation to the state. The 2021 rates range from 0% to 6.12% on the first $35,300 in wages paid to each employee in a calendar year.
If you’re a new employer (congratulations on getting started!), your tax rate ranges from 1% to 2.4%, depending on your industry classification.
Time to dig in! You’ve checked it off your to-do list so you can focus on growing your business. Once each employee’s net pay is calculated (after taking deductions and withholdings into consideration), you’re good to go.
All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and unemployment taxes. Those numbers can add up quickly!
You will need to fill out Form 941 to file federal taxes on a quarterly basis, and Form 940 to report your annual FUTA liabilities. You can pay taxes online using the EFTPS payment system. All the IRS employment tax due dates can be found here.
If you would like to learn more, here are some helpful links that we think can be useful:
Montana Department of Labor and Industry (406) 444-2840 | Unemployment Insurance Division