Montana if you haven’t noticed is turning gray.
Some 221,000 Montanans now identify as “retired,” about 25 percent of this state’s population above age 16, rising from 20 percent 30 years ago.
Montana’s retirees, in fact, now outnumber children and teenagers in the state, who make up 20 percent of the population. Married couples in Montana, at the same time, are having fewer children, due in part to economic struggles and uncertainty.
All of which carries implications, especially for Montana’s tax base.
Fortunately there are the 565,000 working adults here—up from 408,000 in 1995—who contribute the thrust of funding to Montana’s coffers. That share of contributions, however, won’t change anytime soon, especially with post-Covid migration to Big Sky Country easing (thank you very much).
Then there’s the 109,000 working age Montanans who are out of the workforce because of illness or disability, caring for children or other family members, or higher education.
Which brings us back to Montana’s healthy population of seniors, from the older Silent Generation (born between 1928 and 1945) to the younger Baby Boomers (1946 to 1964), who like fine wine are coming of age.
Retirement age.
As an aside, I’ve always been curious how many retirees in this state are actually “retired” here? After all, we’re home to thousands of “snowbirds” who while maintaining primary residences in Montana fly south every winter like clockwork. Aren’t they really retiring to Arizona?
Then we have a growing number of “non-resident” retirees, particularly in this valley, who from the porch swings of their second (and third) homes spend less time than the snowbirds gazing out over Flathead Lake.
It’s reached the point, by one estimate, that roughly one out of every three homes in Montana is somebody’s “home-away-from-home.” Where the vehicle in the driveway probably belongs to the property manager.
Before publishing its list of the country’s top retirement states, the national Tax Foundation, through its State Tax Competitive Index, juggles the complexities of individual income taxes, property and wealth taxes, corporate taxes, unemployment insurance taxes, and sales taxes.
And what state, sans palm trees, is ranked fifth in the nation as the best place to retire in 2026?
You guessed it, Montana. Right behind the sunshine state of Florida, which boasts 6.3 million retirees (Florida’s retirement community actually accounts for only 21 percent of that state’s population compared to Montana’s 25 percent).
As for the top three states to cash out: Wyoming, South Dakota, and Alaska. Don’t ship your beach towels, in other words.
To get a better handle of Montana’s aging tax base and where it’s leading us, Helena’s Legislative Fiscal Division first had to determine the precise number of retirees in Montana — thus the latest 221,000 figure —which it accomplished by sifting through “microdata” of the U.S. Census Bureau’s 2025 Population Survey.
Otherwise, retiree-induced implications in Montana are clearly evidenced in state income tax returns:
• The number of Montana tax forms filed by people over 65 is increasing “far faster” than young filers;
• Capital gains prevalent among seniors are taxed at a reduced rate;
• Income like Social Security benefits aren’t fully taxable;
• State and federal provisions provide additional subtractions to income for filers over 65.
“Due to multiple provisions regarding the taxation of retirement income and retirees, tax liabilities are generally smaller for [retirees] than for younger taxpayers with comparable incomes,” the legislative division explained to the Modernization and Risk Analysis (MARA) Committee during a recent presentation.
Committee members were also told not to expect the state’s tax disparity to improve anytime soon. In fact, Helena’s fiscal wonks warned, Donald Trump’s so-called “Big Beautiful Bill” (H.R. 1) could actually make matters worse.
“This will be further exacerbated by new federal provisions passed in HR 1—additional deduction for over 65,” they advised. “If Montana continues to age, these provisions may eventually lead to slowed individual income tax growth.”
In other words, the growth in retirement incomes will continue to outpace all other income categories.
That said, there were some optimistic chords struck at the close of the committee briefing: Poverty rates in Montana “are lower,” certain gains are seen in “all income levels,” and Montana’s older population means a “wealthier population” overall.
Last but not least, echoing a familiar political refrain: “Montanans are better off now than in the past—on average.”
John McCaslin is a longtime journalist and author who lives in Bigfork.