Luckily, unemployment compensation is not subject to tax in Montana. Those who filed a Montana tax return before March 13, 2021, are not required to change their returns. As long as we talk about federal exclusions of no more than $10,200 in unemployment compensation for the 2020 year, they are perfectly fine.
However, taxpayers who filed after March 12, 2021, should actually follow the IRS instructions in order to exclude all their unemployment benefits from Montana’s income tax. Another thing that all Montana residents should bear in mind is the fact that the exemption for unemployment benefits will be repealed in 2024.