Montana imposes a corporate income tax on business income. Although this tax is labeled as a "corporate license tax," it based on corporate taxable net income attributable to Montana. If you operate your business as a sole proprietorship or via a pass-through, you must report you business income on your personal tax return.
In Montana, you're generally free to choose to operate your business as a C corporation, S corporation, partnership, limited liability company (LLC), or sole proprietorship. However, the entity type you select for your business may, in some cases, decide whether you or your business pays income taxes on the business income.
C corporations are subject to corporate license tax
Domestic corporations (corporations organized in Montana) and foreign corporations (corporations organized in a state other than Montana) are subject to a Corporation License (Income) Tax. The tax rate is 6.75 percent of taxable net Montana income. There's a minimum tax of $50.
If your corporation derives income from both within and without Montana and your sales volume in Montana does not exceed $100,000, you may elect to pay an alternative tax of 0.5 percent of Montana gross sales. Your corporation's activity in Montana must consist only of making sales and you cannot own or rent property in order to be eligible for this alternative tax.
Corporations electing and qualifying as small business corporations pay a minimum fee of $10. The $50 minimum corporation license tax is not applicable to electing small business corporations.
Corporations deriving income from Montana sources, but not subject to the license tax because they are not engaged in business in Montana, are subject to the complementary corporation income tax, which is reported on the same form (CLT-4) as the license tax.