Montana has a progressive state income tax, with a top rate of 6.9%. To offset income taxes, however, the state offers a number of tax credits, including a credit for capital gains. Montana has only a few other types of taxes, and Social Security income, unemployment compensation, state income tax refunds, interest from federal bonds or notes, some pension income and active-duty military income are among the types of income that can be subtracted from federal AGI when calculating taxable income in Montana. Additionally, there is no sales tax in the state and property taxes are below the national average, with an average effective rate of just 0.83%.