Montana 529 tax deduction in 2026
An indexed cap that follows each spouse, parity with other states, and a one-year rule most families never hear about.
Montana tax saved on this contribution
$339
5.7 % of what you put in comes back on your 2026 return.
| Subtracted from state income | $6,000 |
| Your state marginal rate | 5.65 % |
| Cap that applies this year | $9,200 |
| Back per $1,000 contributed | $57 |
Montana: Deduction of contributions to Achieve Montana or another state's 529 savings plan, up to $4,600 per individual taxpayer for 2026 ($9,200 joint if both contribute or from joint funds), indexed after 2025; prepaid tuition plans do not qualify; deductible only in the year of contribution. Read on 2026-10-19. No federal deduction exists for 529 contributions.
| Taxable income | Marginal rate | Tax saved |
|---|---|---|
| $50,000 | 4.70 % | $282 |
| $100,000 | 5.65 % | $330 |
| $200,000 | 5.65 % | $339 |
| $400,000 | 5.65 % | $339 |
Worked out by Radif Partners · How we calculate · Montana rule read on October 19, 2026, brackets of tax year 2026 · not tax advice
Montana deducts contributions to Achieve Montana or to another state's 529 savings plan, up to $4,600 per individual taxpayer for 2026 and $9,200 on a joint return when both spouses contribute or the money comes from joint funds. The cap has been indexed since 2025, so it moves each year, and prepaid tuition plans do not qualify. Montana taxes ordinary income at 4.7 % up to $47,500 single or $95,000 joint and 5.65 % above, so a couple at $120,000 who reach $9,200 save $520 and a single filer at $40,000 at the cap saves $216. The deduction belongs to the year of the contribution only. The Department of Revenue treats K-12 tuition up to $20,000, credential programs and Roth IRA rollovers as qualified. A non-qualified withdrawal, or money taken from an account open less than a year, is recaptured at the highest Montana rate.
| Benefit for contributions | Deduction |
|---|---|
| Cap | $4,600 single, $9,200 joint per taxpayer |
| Another state’s plan counts | Yes (tax parity) |
| State plans (official names, no recommendation) | Achieve Montana |
| Account balance limit | $550,000 |
| K-12 withdrawals qualified for state tax | Yes |
| 529 to Roth IRA rollover qualified | Yes |
| Student loan payments qualified | Yes |
| Add-back on a rollover to another state’s plan | No |
A cap per person, set to rise with prices
House Bill 845 changed the Montana deduction to an indexed amount after 2025. For 2026 the Department of Revenue page sets it at $4,600 per individual taxpayer. On a joint return the figure doubles to $9,200, but only if both spouses contribute or the deposit comes from joint funds. A couple in which one spouse writes the check from a separate account counts as one taxpayer: at $80,000, that $4,600 saves $260, half of what a jointly funded deposit would bring.
The deduction is taken only in the year the money goes in. A December deposit belongs to that year, and a deposit above the cap does not move to a later return.
Montana deduction for your household
Montana tax saved on this contribution
$367
| Subtracted from state income | $6,500 |
| Your state marginal rate | 5.65 % |
| Cap that applies this year | $9,200 |
| Back per $1,000 contributed | $57 |
Two brackets, and a change in 2027
For 2026, Montana taxes ordinary income at 4.7 % up to $47,500 single or $95,000 joint, and at 5.65 % above. Long-term capital gains follow their own lower rates. House Bill 337 already sets wider brackets and a lower top rate for 2027, so the same contribution will be worth slightly less next year at higher incomes. A couple at $120,000 using the full $9,200 saves $520 in 2026.
Parity, except for prepaid plans
Montana gives the deduction for Achieve Montana and for any other state's 529 savings plan. Prepaid tuition plans are excluded, wherever they are run. Achieve Montana accepts contributions until a beneficiary's balance reaches $550,000, the limit in force since February 5, 2026.
Recapture at the highest rate
Montana does not recapture at your own bracket. The Department of Revenue applies its highest rate, 5.65 %, to the amount previously deducted when a withdrawal is non-qualified, or when money comes out of an account that has been open less than one year. A family that opened an account in March, deducted a $6,000 deposit, and withdrew it the following January to pay a bill would owe $339 of recapture tax, whatever its income. The October 2026 Achieve Montana supplement also lists ABLE rollovers to a non-Montana resident. It no longer lists rollovers to another state's 529, which an earlier 2024 supplement included; no Department of Revenue statement on that change was read.
Federal changes Montana accepts
Montana is one of the states that followed the 2025 federal law. The Department of Revenue lists up to $20,000 of K-12 tuition and professional credentials among qualified expenses, and the October 2026 plan supplement says the Department has determined that both the expanded K-12 expenses and credentialing expenses are qualified for Montana. Legislation of May 8, 2025 makes a 529 to Roth IRA rollover qualified as well, within the federal limits of $35,000 over a lifetime and the yearly IRA cap.
Montana account moving to a Roth IRA
Can move to the Roth IRA this year
$7,500
| Yearly room (IRA limit, earned income) | $7,500 |
| Lifetime limit left | $35,000 |
| Account open long enough | Yes |
| 2026 IRA limit | $7,500 |