42.17.105    COMPUTATION OF WITHHOLDING

(1) Employers shall calculate the state income tax amount to withhold from employees according to the length of the payroll period, the employee's gross wages, the number of allowances claimed by the employee on Form MW-4, and the department's "Montana Withholding Tax Tables," provided online at www.mtrevenue.gov. The tables are based on the formulas provided in (2) and (3) and show the amount to withhold each pay period.

(2) Montana withholding tables are based on the following annual withholding formulas as adjusted annually for inflation. Wage withholding is equal to:

(a) 1.80% of the first $7,105 of net taxable earnings; plus

(b) 4.40% of the next $8,120 of net taxable earnings; plus

(c) 6.00% of the next $106,575 of net taxable earnings; plus

(d) 6.60% of net taxable earnings over $121,800.

(3) Withholding formulas for nonannual payroll periods are calculated by dividing the dollar amounts for annual payroll in (2) by the ratio of the number of working days in a year to the number of working days in the payroll period. The following table shows payroll periods and the corresponding divisors:

 

Payroll Period

Divisor

Monthly

12

Semi-Monthly

24

Biweekly

26

Weekly

52

Daily

260

 

(4) By October 1 of each year, the department shall adjust the withholding formulas for inflation by multiplying the dollar amounts in (2) and the withholding exemption amount used in the determination of net taxable earnings in ARM 42.17.101 by the inflation factor, as defined in 15-30-2101, MCA.

(5) If the department determines that the inflation adjustment is immaterial, it may keep existing withholding tables in effect for another year.

 

History: 15-30-2620, MCA; IMP, 15-30-2103, 15-30-2502, MCA; NEW, 1982 MAR p. 2152, Eff. 12/17/82; AMD, 1983 MAR p. 996, Eff. 7/29/83; AMD, 1986 MAR p. 2066, Eff. 12/27/86; TEMP, AMD, 1987 MAR p. 1564, Eff. 9/11/87; AMD, 1987 MAR p. 2244, Eff. 12/11/87; AMD, 1989 MAR p. 230, Eff. 1/27/89; AMD, 1990 MAR p. 121, Eff. 1/12/90; AMD, 1991 MAR p. 129, Eff. 2/1/91; AMD, 1992 MAR p. 2776, Eff. 12/25/92; AMD, 1993 MAR p. 1111, Eff. 5/28/93; AMD, 1993 MAR p. 3045, Eff. 12/24/93; AMD, 2001 MAR p. 1650, Eff. 8/24/01; AMD, 2004 MAR p. 2754, Eff. 11/5/04; AMD, 2008 MAR p. 65, Eff. 1/18/08; AMD, 2010 MAR p. 177, Eff. 1/15/10; AMD, 2016 MAR p. 1974, Eff. 10/29/16; AMD, 2019 MAR p. 2384, Eff. 12/28/19.