If you are a retired service member working in Montana, you can exempt part of your military retired pay from state income tax. The exempt amount is the lesser of half your military retirement income or your Montana source wage income, and you can claim it for five consecutive years. The exemption is scheduled to expire in tax year 2033.
There is nothing to apply for separately. Claim the exemption on your Montana income tax return. The Montana Department of Revenue income tax guide for military members explains how it is calculated.
Your Form 1099-R showing the retired pay, and your Montana wage records such as a W-2.
