Moving from Canada to Montana: Two Brackets, No Sales Tax, and a Short Drive from Alberta and BC

Montana shares a border with Alberta, BC, and Saskatchewan, and Calgarians can drive to Bozeman or Missoula in a day. Bozeman's tech and university scene, Billings' energy and healthcare sector, and the state's outdoor economy draw Canadians. Montana's tax picture is a two-bracket income tax topping out at 5.65% for 2026 (and falling further in 2027), no sales tax anywhere in the state, moderate property tax, and no estate tax.

Key takeaways

• Montana's income tax has two brackets: 4.7% and, for 2026, a top rate of 5.65% (5.9% in 2025), falling to 5.4% in 2027 under 2025 legislation. No local income taxes.
• No sales tax anywhere in Montana.
• Property tax is near 0.8% effective.
• No estate tax.
• Montana starts from federal taxable income and taxes long-term capital gains at a reduced rate.

The Canadian departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the day you leave. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 to defer tax on illiquid assets. The rate is your province's: on a $300,000 unrealized gain, roughly $72,000 from Alberta and $80,000 from Ontario, Quebec, or BC. Provincial health coverage ends around your departure date; confirm the exact date with your plan and arrange US coverage to start the same month.

US federal side

Dual-status return in the arrival year, FBAR on Canadian accounts above $10,000 aggregate, Form 8938 above thresholds, and the RRSP treaty deferral federally. The TFSA loses its tax-free status the day you become a US person; close it before crossing. Equity compensation vesting after the move is split by working days between Canada and the US.

Montana's side

Two-bracket income tax of 4.7% and 5.65% for 2026 (the top rate falls to 5.4% in 2027, and the 4.7% bracket was widened); no local income taxes; no sales tax (a few resort communities levy a small local resort tax); property tax near 0.8% effective with a homestead rate applied to primary residences; no estate tax. Montana starts from federal taxable income and taxes long-term capital gains at reduced rates of 3% and 4.1%.

The RRSP

Federally deferred under Article XVIII of the treaty and deferred for Montana because the state starts from federal taxable income. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Montana's graduated rates.

Who makes this move

Alberta and BC software engineers to Bozeman's tech scene, Alberta energy professionals to Billings and the Bakken-adjacent operators, Canadian healthcare staff to Billings and Missoula's hospital systems, Canadian academics to Montana State and the University of Montana, and Alberta and BC outdoor-industry professionals to Montana's recreation economy.

Worked example

A Calgary software engineer moves to Bozeman on June 30 with $200,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, and a Calgary home sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 48%: roughly $48,000.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. No tax on departure; federal and Montana deferral.
• Bozeman. Combined top rate about 42.7%. GST 5% becomes sales tax zero. Property tax on a $750,000 home around $6,000.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"2025 Ordinary Income Tax Rates — Single and Married Filing Separately: First $21,100 of Montana Ordinary Income, 4.7%; Montana Ordinary Income exceeding $21,100, 5.9%. [...] 2025 Net Long-Term Capital Gains Tax Rates: First $21,100 of capital gains minus Montana Ordinary Income, 3.0%; Net long-term capital gains exceeding $21,100 minus Montana Ordinary Income, 4.1%." — Montana Department of Revenue, 2025 Montana Tax Tables and Deductions, https://revenue.mt.gov/taxes/tax-tables-and-deductions/2025

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

Montana's reduced rate on long-term capital gains is a feature Alberta movers should know about: a gain realized as a Montana resident is taxed federally at preferential rates and by Montana at 3% or 4.1%, which is lower than most states. It does not change the pre-departure decision, but it makes post-move gains cheaper.

See also: Weighing Florida instead? See the Canada-to-Florida guide. Browse every corridor by city, province, and state.

Next step

Fairlight prepares the Canadian departure return, the first-year federal and state returns, and ongoing cross-border filings. See cross-border pricing or book a call.