Bank Gap by State

The Bank Gap in Montana

Montana simplified its income-tax brackets in recent reforms, and the current 6.75% top rate on savings interest is high enough that the Treasury exemption is worth checking for higher-income savers.

Big-bank average0.38%

Best available4.40%

$1,005/yrlost on a $25k balance · 4.02 pp spread

Last reviewed August 7, 2026 · SwitchWize Research Desk

Best savings APY

4.40%

high-yield

National average

0.38%

big-bank avg

APY gap

4.02 pp

spread

MT tax on interest

6.75%

top marginal rate

Before MT tax

$1,005/yr

on a $25,000 balance

After MT 6.75% tax

$937/yr

recoverable by switching

On a $25,000 balance, the gap is about $1,005 a year before tax. After Montana's 6.75% top income-tax rate on the additional interest, you keep about $937. Because Treasury interest is exempt from Montana income tax, routing that cash through a state-tax-exempt Treasury vehicle can recover most of the difference.

Estimated Bank Gap by balance

Estimated annual Bank Gap by balance at 0.38% current APY versus 4.40% better-fit APY, before and after MT state income tax
Balance	Current earnings	Better-fit earnings	Estimated Bank Gap	After MT tax
$5,000	$19	$220	$201	$187
$10,000	$38	$440	$402	$375
$25,000	$95	$1,100	$1,005	$937
$50,000	$190	$2,200	$2,010	$1,874
$100,000	$380	$4,400	$4,020	$3,749

Estimates over 12 months at 0.38% current APY and 4.40% better-fit APY. The "After MT tax" column applies MT's 6.75% top income-tax rate to the additional interest; federal tax applies on top and is not shown. Example only — your result depends on your balance, rates, and time horizon.

Why Montana changes the math

Montana taxes interest income at a top rate of 6.75% following a recent bracket simplification. Treasury interest is exempt from that tax, giving higher-income Montana savers a real after-tax edge from T-Bills or a government money market fund.

Living costs across most of Montana sit near the national average, but resort communities like Bozeman and the areas around Yellowstone have seen sharp housing-cost increases that push local emergency-fund targets up.

Cost of living in Montana is near the national average, rising in resort areas like Bozeman, which shapes how large an emergency fund needs to be and therefore how many dollars the Bank Gap quietly costs on idle cash.

After-tax tip

Because Montana taxes savings interest but not Treasury interest, the highest after-tax yield is not always the highest headline APY. Run your tax profile through the short-term savings tool to see whether a Treasury bill or government money market fund beats a taxable account for you.

Open the short-term savings tool

Frequently asked questions

Does Montana tax high-yield savings account interest?

Yes. Montana treats savings interest as taxable income, with a top rate of 6.75%. Interest from U.S. Treasury bills and the Treasury portion of a government money market fund is generally exempt from Montana income tax, which can change the after-tax winner for higher earners.

Is a high-yield savings account worth it in Montana?

Yes. Even after Montana state tax, moving cash from a national-average account to a top high-yield savings account still leaves you with substantially more interest. The Bank Gap is far larger than the state-tax drag on the additional interest.

Are T-Bills better than a HYSA for Montana savers?

They can be for higher earners. Because Treasury interest is exempt from Montana income tax, a T-Bill or government money market fund can deliver a higher after-tax yield than a fully taxable savings account at a similar headline rate. The short-term savings calculator computes the breakeven for your exact tax situation.

Your personal Bank Gap

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Educational information, not tax or financial advice. State tax rules are summarized at a high level and depend on your full situation. Rates are illustrative of current market conditions and should be confirmed with the provider. Confirm tax treatment with a qualified professional.