Tax Credits, Abatements, and Exemptions
Local development organizations and local governments may assist with tax credits, abatements, and exemptions. Types of these incentives include the following:
New or Expanding Industry Wage Credit:
A new or expanding manufacturing corporation in Montana may receive a corporation license tax credit of 1 percent of wages paid to new employees for the first three years of operation and expenses.
Property Tax Abatements:
Property tax abatement is available to certain new or expanding businesses. The governing body of the affected county or the incorporated city or town must approve by resolution the abatement. The tax benefit received is a percentage multiplier applied to the increase in taxable value of the qualifying improvements or modernized processes. The tax benefit applies to the number of mills levied and assessed for high school district and elementary school district purposes and to the number of mills levied and assessed by the local governing body approving the benefit. New/expanding industries will be taxed at 50 percent of taxable value for the first five years after a construction permit is issued. The tax rate is raised incrementally over the next five years to 100 percent.
Alternative Fuels Property Tax Exemption:
Provides an exemption from property assessment for qualifying non-fossil fuel energy generating systems installed. The maximum exemption amount per year is $100,000 for a commercial property. The value of the qualifying non-fossil fuel energy generating system must be included in the assessed value of the property prior to its exemption. The exemption lasts for a period not to exceed 10 years from the year of installation.
Alternative Energy Investment Tax Credit:
Commercial and net metering alternative energy investments of $5,000 or more are eligible for up to 35 percent tax credit against individual or corporate tax on income generated by the investment. The credit may only be taken against net income produced by the eligible equipment or by certain associated business activities. Associated facilities, manufacturing plants producing alternative energy equipment and new or expanded businesses using the energy generated by the alternative energy investment may use the tax credit. The credit must be taken the year the equipment is placed in service; however, any portion of the tax credit that exceeds the amount of tax to be paid may be carried over and applied against state tax liability for the following 7 years. A project of 5 MWs or larger on a reservation may carry the credit over for 15 years, if it has an employment agreement with the tribal government.
New Market Tax Credits:
Can help communities attract capital to good projects on favorable terms. The program provides an incentive to debt and equity investors in the form of a 39 percent federal income tax credit for investing capital into qualified projects in eligible low-income areas. Eligible investment types include most real estate projects and operating businesses (with some exceptions). Total project size of at least $3 million, project in a designated low-income census tract with either a poverty rate of 20 percent or greater or Gross Median Income of 80 percent of less of the state average, strong economic development and/or community impact, such as helping to create or retain jobs; acting as the catalyst for larger development, infusing sources of new investment capital into an under-served, low-income area; and creating new access to community services such as education, healthcare, child & elder care and retail services.
Creation of tax increment financing district:
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 purposes such as financing land acquisition; industrial infrastructure; rail spurs; buildings; and personal property related to the 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.
For additional information on this program please review the website:
Montana Board of Investments:
The Montana Board of Investments (MBOI) may loan funds to a local government for public infrastructure improvements. The local government repays the loan from fees and assessments to the business using the infrastructural improvements. The business may write off up to 100 percent of the related fees and assessments paid to the local government on its Montana income tax as it documents the related job creation. The infrastructure improvements are essentially a grant to the business as a direct reduction of project development costs. The business to be assisted is analyzed by MBOI and the final decision is based on the strength of the business project being financed. The actual benefit to the company is limited by the number and quality of jobs created and the ability of the business to write off the tax credits on its actual income tax liability. Infrastructure loans are limited to $16,666 per job created as a result of the project. The minimum loan amount is $250,000.
The MBOI may participate in bank loans up to a maximum of 10 percent of the Permanent Coal Tax Trust or approximately $64 million. For loans 6 percent or less of the trust, the MBOI may participate up to 80 percent of the bank loan. For loans over 6 percent of the trust, the MBOI participation is limited to 70 percent of the loan. MBOI can provide for fixed loan rates as low as approximately 5-6 percent depending on the strength of the borrower and the number of jobs created. Interest rates may be lowered by up to 2.5 percent for the initial $64 million if a business project involves the creation of up to 50 new higher paying jobs. MBOI fixed-rate financing is available for up to 25 years under this program. The bank portion of the loan is priced by the lending institution and may be fixed or variable.
Businesses producing value-added products and commodities and that project the creation or retention of 10 or more jobs are eligible to apply through a bank for an MBOI 15-year, value-added loan. Businesses creating or retaining 10-14 jobs are eligible for an interest rate of 4 percent for five years after the jobs have been established. Businesses creating or retaining 15 or more jobs are eligible for an interest rate of 2 percent for five years after the jobs have been established. The MBOI loan participation is limited to 75 percent of the total loan up to a maximum participation of 1 percent of the Permanent Coal Trust or approximately $6.4 million. There is no provision for additional job creation-based interest-rate reduction because of the low initial rate.
MBOI may also purchase federal loan guarantees, such as SBA, Rural Development Business, and Industry Guarantees, and provide the same low fixed rate advantages and job creation interest rate reductions to the business as the loan participation program described above. The MBOI may purchase up to 100 percent of the guaranteed portion of the loan for fixed-rate financing up to 30 years.
For additional information on this program please review the website:
Montana Department of Commerce Economic Development Finance Programs
Big Sky Economic Development Trust Fund Program (BSTF):
The purpose of the Big Sky Economic Development Fund is to create well-paying jobs for Montana residents and promote long-term, stable economic growth in Montana. Trust fund dollars can be awarded to local governments in the form of grants to basic sector businesses for job training, purchases of equipment, moving expenses, or other eligible BSTF activities (Category I funding). There is a $1 for $1 cash match requirement. Applicants may apply for up to $5,000 per each eligible new job created, or up to $7,500 per job in high-poverty counties.
In addition, funds can be awarded to Certified Regional Economic Development Corporations and other eligible economic development organizations in the form of grants for economic development planning and capacity building activities (Category II funding). Applications are accepted on an open cycle basis for Category I, and quarterly for Category II.
For additional information on this program please review the website
Community Development Block Grant - Economic Development Program (CDBG-ED):
The Community Development Block Grant – Economic Development Program assist local governments address their greatest economic development needs. The program receives an annual allocation of funding from the US Department of Housing and Urban Development. The goal of the program is to provide jobs to qualified low and moderate-income persons. Ineligible communities to apply for this program are Missoula, Great Falls, and Billings. Eligible communities may apply for up to $400,000 per program year. The Community Development Block Grant – Economic Development Program provides grant and loan financing for the following types of activities:
Local governments may apply for up to $25,000 for a variety of planning and technical assistance activities related to economic or business development including community needs assessments, downtown revitalization studies, feasibility studies, Preliminary Architectural Reports, and Preliminary Engineering Reports.
Customized Employee Training:
Applications may include requests for assistance with workforce training for new and/or existing employees. Requests may be for eligible expenses up to $5,000 per employee, or up to $7,500 for the training of people with disabilities. Minimum compensation thresholds must be met for wages and benefits.
Economic Development Projects:
Local governments may apply for up to $25,000 per created or retained job for a business that is either hiring additional employees, or is in the position of retaining employees to maintain operations. Depending on whether the business is non-profit or for-profit, it may receive a grant or low interest loan for working capital, equipment purchases, infrastructure improvements, constructions costs, or other eligible business expenses. Businesses must submit financials, business plans, hiring plans, and other required documents, and provide a financial match.
For additional information on this program please review the website
Primary Sector Workforce Training Grant Program (WTG):
The Montana Department of Commerce manages a state funded workforce training program. Eligible businesses must meet the definition of a Primary Sector Business. The financial match for the business is one dollar of private funds for every three dollars of Primary Sector Workforce Training funds applied for. Businesses may apply for up to $5,000 per new job created for documented training expenses. Businesses must meet minimums for number of hours worked, and thresholds for employee compensation. Businesses can apply directly to the Montana Department of Commerce for this program. The application needs to include financial information, business plan, and a detailed hiring and training plan.
For more information on this program, please see the website at
Montana Wood Products Revolving Loan Fund
The Montana Wood Products Revolving Loan Funds is a state and federally funded program comprised of two pools of funds available for assistance to wood and timber related businesses, the EDA Wood Products Revolving Loan Fund, and the State Wood Products Revolving Loan Fund. Eligible businesses may apply for up to $20,000 per job created or retained. Businesses are required to make a matching financial contribution to their proposals. Funds are available depending on the amount of loan repayments received each year.
For more information on these programs, see the website
Indian Country Economic Development Program
The Indian Country Economic Development Program is a state funded program to provide economic development funding to the eight tribal governments in Montana to address their greatest economic development needs. Tribal governments apply directly to the Montana Department of Commerce for a maximum of $70,000 per program year. Eligible activities may include business development projects, workforce training projects, economic development studies, or other economic development-related projects. Tribes must provide financial match for their proposals and application deadlines do apply.
Please see the website for additional information
Board of Research & Commercialization Technology
The Montana Board of Research and Commercialization Technology was created by the 1999 Montana Legislature to provide a predictable and stable source of funding for research and commercialization projects to be conducted at research and commercialization centers in Montana. The purpose of the program is to encourage economic development through investment in research projects that have a clear path to commercialization.
The Board takes the following criteria into account when making funding decisions:
For more information on this program, please visit the website
Has potential to diversify or add value to a traditional basic industry of the state's economy,
Shows promise for enhancing technology-based sectors or commercial development of discoveries,
Employs or takes advantage of existing research and commercialization strengths,
Has a realistic and achievable project design,
Employs an innovative technology,
Is located in the state,
Has a qualified research team,
Has scientific merit based on peer review, and
Includes research opportunities for students.
Incumbent Workforce Training Grant Program
The Montana Department of Labor’s Incumbent Workforce Training Grant Program is available to businesses with no more than 50 employees in the State and no more than 20 at any one location. Training is available to employees that have passed the company’s probationary period with up to $2000 available for full-time employees and $1000 for part-time employees. Businesses must be able to contribute matching funds. Training grant dollars may be used for approved training, travel or instructional materials.
For more information on this program, please see the website
Microbusiness Development Corporations
The Montana Department of Commerce works with seven Microbusiness Development Corporations around the state that can provide loan financing to microbusinesses. Loans can be made for up to $100,000 to qualified Montana microbusinesses. A qualified microbusiness has 10 or fewer employees, and gross annual revenue of less than $1,000,000. Microbusiness Development Corporations can provide capital to businesses, in addition to training and technical assistance. To see the map of Microbusiness Development Corporations in your area and further information on this program, see the website
Trade Show Assistant Program
The Montana Department of Commerce Trade Show Assistance Program assists companies in exploring new domestic and international wholesale markets. Funds are available to Montana businesses attending any given trade show for the first time.
Eligible applicants will be reimbursed for 50 percent of qualifying expenses that include:
For additional information see the website
Booth/space rental or US Commercial Services Gold Key fee
Booth equipment, furniture and carpeting rental
Booth utility costs
Promotional materials (product flyer specific to show, booth signage, etc.)
Shipping, storage, drayage (cost of moving freight at exhibition site) and show labor.
Small Business Innovation Research Program:
The Montana Department of Commerce houses the Small Business Innovation Research Program. This program helps Montana companies compete for more than $2.5 billion dollars in federal grants that have been earmarked to fund Research and Development. The program offers free counseling assistance to any individual or small business that wants to explore SBIR grant opportunities. To win a SBIR grant, a business owner must be an organized for profit located in the US, have at least 51% owned and controlled by citizens of the US, at least 51% owned and controlled by another for-profit that is at least 51% owned and controlled by citizens of the US, and has 500 or less employees.
For additional information see the website
Montana SBIR/STTR Matching Fund Program:
The purpose of Montana SBIR/STTR Matching Funds Program is to foster job creation and economic development in the state by providing matching funds to eligible businesses meeting the criteria set forth in the guidelines. It is designed to grant funds to Montana companies that have been awarded a Small Business Innovation Research Program or Small Business Technology Transfer Program, Phase I award and that, if the opportunity to do so is available, intend to apply for a Federal SBIR/STTR Phase II award. The Federal SBIR/STTR Program provides for funding competitions in two phases that are relevant to the Montana Program:
Phase I - to conduct feasibility research
Phase II - to expand and develop Phase I results and develop commercially viable innovations
For information on the guidelines for this program, see the website
Local development programs:
All major - and most smaller - communities in Montana have local development corporations with local revolving loan funds that can enhance total finance packages and assist with business location issues. The Montana Department of Commerce regularly works closely with local development corporations to assist with business location projects by combining resources as much as possible.
Montana State Contact:
Governor's Office of Economic Development
P.O. Box 200801
Helena, MT 59620
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.