Two things decide whether a job in Montana makes you money: getting the license your work needs, and setting aside the right tax. Montana licenses its contractors and taxes their profit, so both are worth getting right before you take work on.
Each section below points to a tool that runs your exact numbers for Montana.
Tax in Montana
Montana has a graduated state income tax that runs up to 5.65% at the top, on top of your federal taxes. Graduated means the rate climbs as your profit does, so a good year costs proportionally more. You owe federal income tax and self-employment tax as well, and you make estimated payments to both Montana and the IRS through the year.
Montana has no statewide sales tax, so you do not add sales tax to your work. Some local areas can still levy their own, so check locally if you work in a taxing town.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for Montana.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a Montana contractor paid, and in Montana you generally have to record it within 90 days of your final furnishing, or the owner filing a notice of completion. There is usually an earlier notice to send first, so do not wait until the filing deadline to start. Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. 2 years from the date you filed the lien (71-3-562). Nobody can force you to sue sooner: Montana has no demand-to-commence provision. If someone bonds the lien off, your deadline against the bond stays the same 2 years (71-3-553). Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (Mont. Code Ann. 71-3-531, 71-3-533, 71-3-535, 71-3-551, 71-3-553, 71-3-562).
On money held back as retainage, this is our plain-English summary for Montana. NOT VERIFIED. No citation on this row at all: it is carried from the June 2026 spine reconciliation and has never been read against a Montana statute here. Two bare percentages, and a release on final acceptance of each portion of the work with no section behind it.
- Private work: 5%.
- Public work: 5%.
- Release (unconfirmed): On final acceptance of each portion of the work.
Check the Retainage Calculator before you sign a contract that holds back more.
There is no Montana retainage letter on this site, and the NOT VERIFIED line above is why. A letter that tells the party holding your money what to hand over only gets written over a row that has been read against the statute in full. The Document Hub carries the forms that do not turn on a state rule.
Do you need a license in Montana?
Montana requires a state contractor license to take building work on. The threshold that triggers it: Statewide license for all contractor businesses, with a casual/minor exemption below $2,500 a job. Working unlicensed when your job needs a license is the expensive mistake here. The chapter is EXCLUSIVE: a political subdivision may not require or issue any registration, license or bond for the same or a similar purpose, though local general business-license fees survive. 24 exemptions at 37-45-104 including farmers and ranchers, enrolled tribal members on reservation land, logging-industry forest access roads, and independent contractors with no employees. The license comes from Montana Department of Labor and Industry. Montana accepts the NASCLA commercial exam, useful if you work across state lines.
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
Montana adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.
- Homes: 2021 (ARM 24.301.154, effective 11 June 2022)
- Electrical: 2020 per the state's own rule (ARM 24.301.401); widely reported as 2023, but no adoption notice for that change was found and we follow the rule text
- Energy: 2021 (ARM 24.301.161, effective 11 June 2022)
- Plumbing: 2021 UPC (ARM 24.301.301, effective 11 June 2022)
Montana adopts one code stack statewide and a city or county may only enforce editions the Building Codes Bureau has itself adopted, so what varies locally is who inspects, never which edition applies. The catch is that a house may not be inspected at all: state law exempts residential buildings of fewer than five dwelling units from the state building permit requirement, so outside a certified local program a one- or two-family home can be built without a state building permit even though the residential code nominally governs it. Electrical and plumbing permits are still required everywhere. A full move to the 2024 editions entered rulemaking on 7 August 2026 with no effective date fixed.
Source: ARM title 24 chapter 301, in particular 24.301.131, .154, .161, .301 and .401, under title 50 chapter 60 MCA; MCA 50-60-102 (residential permit exemption); Montana Administrative Register notice 2026-95.1 and 95.2 of 7 August 2026. We have not yet read this row against Montana's own adopting authority, so confirm the edition locally before you rely on it.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in Montana is $10.85 an hour. CPI-indexed. A Montana business NOT covered by the FLSA with gross annual sales of $110,000 or less may pay $4.00 an hour. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.
Workers' comp rates in Montana are not published as a single figure; they turn on your trade's class code and your payroll. Get a realistic range on the Workers' Comp Estimator, then get a real quote.
If a client will not pay
If a client will not pay, you can sue for up to $7,000 in Montana's Small Claims Court (Justice Court) and lawyers are restricted, so it stays fairly informal. That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 6 years to sue you over the work under a written contract in Montana, and there is no absolute cutoff, so your exposure turns on when a defect is found. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in Montana?
Montana has a graduated rate up to 5.65% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in Montana?
Yes. Montana requires a state contractor license. The threshold: Statewide license for all contractor businesses, with a casual/minor exemption below $2,500 a job. It is issued by Montana Department of Labor and Industry.
What is the small claims limit in Montana?
You can sue for up to $7,000 in Montana's Small Claims Court (Justice Court). The filing fee is typically $20 to $60. Larger claims go to regular civil court.
How long do I have to file a mechanic's lien in Montana?
Generally 90 days from your final furnishing, or the owner filing a notice of completion, and there is usually an earlier notice to send first. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
What is the minimum wage in Montana?
$10.85 an hour in Montana, above the federal $7.25. Several states step their rate mid-year, so confirm it before you set a payroll.
What building code does Montana use?
Montana adopts statewide. Homes: 2021 (ARM 24.301.154, effective 11 June 2022). Electrical: 2020 per the state's own rule (ARM 24.301.401); widely reported as 2023, but no adoption notice for that change was found and we follow the rule text. Editions move, so confirm yours with the building department before you price a job.
The honest bit
These are the 2026 rules for Montana as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the Montana tax and licensing agencies, and your local building department) or with a professional. Where Montana does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Sources
- Montana contractor licensing authority · Montana contractor licensing authority. Who must hold a contractor or trade license in Montana, and the licensing instrument (Mont. Code Ann. 37-45-104(8))
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