Tax Credits

New or Expanding Industry Wage Credit: A manufacturing corporation may receive a corporation license tax credit equal to 1% of wages paid to new employees for the first 3 years of operation and expenses.

Research and Development Tax Credit & Tax Exemption:  Program offers a 5% tax credit on qualified R&D expenditures.  The credit is non-refundable and non-transferable; however it may be carried back for 2 years and carried forward for 15 years. All net income earned form research and development activities are exempt from corporate license tax during a company’s first 5 taxable years of activity in Montana.

SPECIAL ZONING

Empowerment Zone Tax Credit: For individuals or corporations meeting eligibility criteria, the credit against income tax liability for each qualifying employee is equal to $500 for the first year of employment, $1,000 for the second year of employment, and $1,500 for the third year of employment. The credit may be carried back for 3 years and carried forward for 7 years. The employer is also entitled to a credit against the state’s insurance premium tax.

Tax Increment Financing Districts: State law provides for the creation of a tax increment financing industrial district for industrial development projects. A local government may issue bonds for a wide variety of development purposed such as financing land acquisition, industrial infrastructure, rail spurs, buildings, and personal property related to public improvements. The incremental increase in the tax base over the unimproved value before the project was developed can be committed to repayment of the bonds. The bond financing can essentially be considered a grant by the business because taxes paid will directly benefit the district. The actual amount of bond financing available is based on the ability to repay the bonds with the incremental value of the tax increase.

GRANTS

The Primary Sector Workforce Training Grant program: Provides funds to businesses for training new and existing full-time workers with a maximum grant of $5,000 for each full-time employee and $2,500 for each part-time worker.  Qualifying businesses must provide a $1 of match for every $3 dollars of grant funds.

Big Sky Economic Development Trust Fund: This discretionary program provides funds to local governments in the form of grants and loans for the purchase of machinery, equipment and/or working capital for economic development projects.  Up to $7,500 may be awarded for each new full-time job created. In addition, funds can be awarded in the form of grants for planning and capacity building.

TAX ABATEMENTS

New Industrial Property Tax Abatement:  Manufacturing businesses that establish a new location in Montana are eligible to receive a reduced taxable rate of 3% on real and personal property for a period of 3 years.  Property dedicated to R&D is also eligible for the reduced tax rate.

New or Expanded Industries Property Tax Abatement: A business that starts operations or invests a minimum of $125,000 worth of qualifying improvements or modernized processes may receive a 50% property tax abatement from the local governing body. The tax abatement is 50% for the first 5 years and escalates 10% per year with the abatement expiring after the ninth year of operation.

Reduced Rate for Remodeling of Building or Structures: Properties that are remodeled, reconstructed or expanded and result in an increase in taxable value of at least 2.5% are eligible for reduced property taxes. The tax rate is 0% during the construction period and escalates at an annual rate of 20% with the reduced rate expiring in the fifth year following construction.

Industrial Park Property Tax Exemption: If approved by the local governing body, an industrial park owned and operated by a local economic development organization or port authority is eligible for an exemption from local property taxes.

 

Last updated: April 2017

 


 
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