Gambling winnings tax in Montana

Montana sets no limit of its own on gambling losses, but allows them only if you itemize on your federal return. Take the standard deduction and it taxes your gross winnings. Whether only 90 percent of your losses count from 2026 is not settled.

Checked against Montana’s own sources on 2026-09-25.

In short

If you deduct state income tax on federal Schedule A, a gambling loss can be worth less in Montana than on your federal return. Montana adds that tax back, down to the federal standard deduction.3
If your gambling losses make you itemize on your federal return, you also give up the federal standard deduction on your Montana return.6
Your gambling winnings are ordinary income. They use Montana’s 4.7 and 5.65 percent rates, not the lower rates for net long-term capital gains.5

How Montana treats gambling losses

Montana allows the deduction only to filers who itemize on the federal return. Take the federal standard deduction and the offset disappears, so gross winnings are taxed even in a year you finished down.

The two examples below are the same numbers the calculator uses, worked at Montana rates.

Two examples, worked at 2026 Montana rates

A single filer with $60,000 of other income who takes the standard deduction on everything except gambling losses.

A losing year

You win $50,000 and lose $52,000, so you finish down $2,000.

Federal: $3,596
Montana: $1,056
Total: $4,652

You finished the year down and still owe tax.

Federally you itemize, so your losses offset your winnings, but the 2026 rule caps that deduction at 90 percent and leaves $3,200 taxable. Montana allows the loss deduction only to filers who itemize federally, which you do. Your Montana income, after the deduction your federal return takes, because Montana starts from federal taxable income, goes from $43,900 without the win to $63,200 with it. The extra $19,300 is taxed at graduated rates, which comes to $1,056.

A winning year

You win $50,000 and lose $10,000, so you finish up $40,000.

Federal: $10,350
Montana: $2,791
Total: $13,141

Federally you take the $16,100 standard deduction, which is worth more than itemizing, so your gambling losses do not reduce your federal tax at all. Montana allows the loss deduction only to filers who itemize federally, and you do not. Your Montana income, after the deduction your federal return takes, because Montana starts from federal taxable income, goes from $43,900 without the win to $93,900 with it. The extra $50,000 is taxed at graduated rates, which comes to $2,791.

Montana income tax rates, 2026

Single filer thresholds. Married filing jointly and head of household use different bands. Married filing separately uses the single bands.

Taxable income	Rate
$0 to $47,500	4.7 percent
$47,500 and above	5.65 percent

The calculator also applies what this table leaves out: the federal overall limit on itemized deductions at the top federal bracket, taken before the table.

Withholding on winnings

Montana withholds 5.65 percent. The payout that triggers it depends on the wager, and the lowest trigger is $5,000. The rules in the state's sources:

the state lottery and sports wagering: above $5,000 (lottery games under Title 23 chapter 7, which includes sports wagering).
other lotteries, sweepstakes and wagering pools, pari-mutuel wagering, slot machines, keno and bingo, poker tournaments and other wagers: nothing is withheld. Card games, bingo, raffles and Calcutta pools are outside the definition of a lottery game.

Withholding is a credit against the bill, not the bill itself. It does not settle what you owe.

The federal 90 percent loss limit in Montana

4, 7, 11

From tax year 2026 the federal deduction for gambling losses is cut to 90 percent of what you lost, and never more than what you won. Public Law 119-21 did it, at section 70114(a), by rewriting 26 U.S.C. 165(d).

Montana has not said whether the federal 90 percent limit applies. Its own law measures the state deduction by the federal figure, so the limit can arrive without Montana doing anything. Montana follows the federal code as it changes.

Our estimate assumes the limit applies, which gives the higher tax. The calculator also shows the tax if the limit does not apply. We would rather tell you the number could be lower than let you plan around one that turns out to be too low.

If you do not live in Montana

Lottery winnings from a ticket bought in Montana are Montana source income regardless of the winner’s residency. A nonresident reports them on Form 2 Schedule II.

The calculator works the bill for somebody who lives in Montana. It does not apportion income between states, so a nonresident return is not what the figure above describes.

More about Montana

If you itemize

If your gambling losses make you itemize on your federal return, you also give up the federal standard deduction on your Montana return.6

If you deduct state income tax on federal Schedule A, Montana adds it back, but only down to the federal standard deduction (MCA 15-30-2120(2)(j)). So your total Montana deduction can be smaller than the federal one, and a gambling loss can be worth less in Montana than on your federal return.3

Where the add-back stops at the federal standard deduction, the federal overall limit on itemized deductions does not change your Montana figure.

Rates on your winnings

Montana’s lower rates of 3.0 and 4.1 percent apply only to net long-term capital gains. Your gambling winnings are ordinary income and use the 4.7 and 5.65 percent rates.5

In 2027 the top Montana rate falls again, to 5.4 percent, with wider brackets.5

Lottery withholding

The statute sets Montana lottery withholding at the highest marginal rate, which House Bill 337 makes 5.65 percent for 2026. But the 2026 Publication 1 prints 5.56 percent, which looks like a typo. The statute controls, so this page uses 5.65 percent, but the department has not confirmed this.8, 9

About this estimate

If you are 65 or older, the calculator takes off Montana’s subtraction of $5,660 for each person 65 or older, the figure the 2026 Publication 1 prints. The indexed 2026 figure may be about $5,810 once the department publishes it.

The calculator does not include Montana’s add-back of state income tax. So where the add-back stops at the federal standard deduction, the calculator still applies the federal overall limit on itemized deductions.

If you enter your Social Security, the calculator taxes the part the federal return taxes, as Montana does.

Sources

Every figure above traces to a primary source: a statute, an administrative code, a state agency page, or official form instructions.

1. Form 2 instructions (2025), line 16: the Elderly Homeowner/Renter Credit, up to $1,150 at 62 or older, household income under $45,000 (checked 2026-10-12)
2. 2026 Publication 1, estimated tax: a subtraction of $5,660 for taxpayers 65 and older (checked 2026-10-12)
3. 2025 Montana Form 2 instructions, line 2: the same type of deduction as the federal return, with state income tax added back only down to the federal standard deduction, plus Form 1040 line 13b, the enhanced deduction for seniors (checked 2026-09-25)
4. MCA 15-30-2101(22), Montana taxable income means federal taxable income as determined for federal purposes (checked 2026-09-21)
5. MCA 15-30-2103, rate brackets including the 2026 schedule (checked 2026-09-11)
6. Form 2 instructions (2025), deduction method must match the federal return (checked 2026-09-11)
7. MCA 15-30-2101, rolling conformity to the Internal Revenue Code (checked 2026-09-11)
8. MCA 15-30-2522, withholding on lottery and sports wagering winnings over $5,000 (checked 2026-09-11)
9. Montana DOR Publication 1 (2026), Montana source lottery winnings (checked 2026-09-11)
10. MCA 15-30-2101(22): "Montana taxable income" means federal taxable income as determined for federal income tax purposes and adjusted as provided in 15-30-2120, which from 2026 carries the federal overall limit on itemized deductions (checked 2026-10-01)

The federal rule, for the parts of this page that rest on it

11. Public Law 119-21 section 70114(a), which rewrote 26 U.S.C. 165(d) on wagering losses from tax year 2026 and sets out its text (checked 2026-10-18)

We could not confirm these from an official source: whether any city or county tax applies.