Montana Basic Business Taxes 2011
Montana's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include no sales or use tax, and property tax incentives and abatements.
Area Development Online Research Desk (March 2011)
Corporate income tax:
The corporation license tax is a franchise tax levied on corporations for the privilege of doing business in Montana. The rate of the tax is 6.75 percent and is calculated on net income earned in Montana.
Sales and use taxes:
The state levies no sales or use tax.
All property in the state, unless specifically exempted, is subject to property taxation. The net business equipment tax rate is approximately 1.4 percent, depending on the local taxing authority. Businesses with less than $5,000 in business equipment will be exempt. The actual rate of real property taxation is a composite of all levies by the local taxing authorities and will vary among communities throughout the state. Real property is assessed in its location. Mining operations and public utilities are treated separately.
Property tax incentives:
Montana property tax incentives can generally be divided into two categories: property tax abatements and local option property tax exemptions. Property tax abatements result in a reduction in the taxable value of the property. This reduction is accomplished by directly reducing the taxable value of property or by applying a reduced tax rate to the property's assessed value. Local option property tax exemptions exclude part or all of the entire value of property from taxation. A third type of incentive available is the suspension and cancellation of delinquent property taxes to facilitate the purchase and continued operation of a business.
Property tax abatements:
If approved by the local governing body, property of certain new or expanding industries is eligible for reduced taxable valuation (up to 50 percent of their taxable value for the first five years) during the first nine years after construction or expansion.
If approved by the local governing body, remodeling, reconstruction, or expansion of existing buildings or structures may qualify for a reduced tax rate for five years following construction.
If approved by the local governing bodies, an existing value-added industry that expands to include value-added equipment is entitled to receive a decrease in the tax rate on value-added machinery and equipment.
Machinery used in canola seed oil processing is eligible for a taxable valuation rate of one percent in tax year 2002, and 0 percent thereafter.
Local option property tax exemptions:
If approved by the local governing body, a business incubator owned or leased and operated by a local economic development organization is eligible for an exemption from property taxes.
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 property taxes.
If approved by the local governing body, delinquent property taxes on commercial property may be suspended to facilitate the purchase and continued operation of a business utilizing the commercial property.
New or expanding industry wage credit:
A new or expanding manufacturing corporation may receive a corporation license tax credit of one percent of wages paid to new employees for the first three years of operation and expenses.
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.