Property Tax Incentives

Job Adjustment Credit (JAC) Loan/Grant

State infrastructure financing is a loan made to the local government. The loan proceeds are used to construct public infrastructure in support of a project. The loan, though it is made to the local government, is secured by a company, which pays a user fee for the infrastructure loan. The user fee is equivalent to the principal and interest payments necessary to retire the loan to the local government. The term of the loan will be set by a mutual agreement between the company, the local government, and the State of Montana.

The full amount of the user fee paid by a company, which represents the principal and interest to retire the loan to the local government, is eligible for a 100% corporate income tax credit -- dollar-for-dollar. Thus, once a company begins to owe corporate income taxes, it can reduce that tax liability by the full amount of the P&I equivalent paid. The tax credit can be carried forward for seven years, insuring that a company can make full use of the tax credit.

Property Tax Incentives (other than TIFID)

Corporate Income Tax Incentive

New manufacturing operations in Montana receive a corporate income tax credit equal to 1% of the wages paid during each of the first three years of operation. If a company qualifies as a research and development firm, that company could receive an exemption from corporate income taxes during its first five taxable years of activity in Montana.

Corporate Property Tax Incentive for Research and Development

Business equipment belonging to a qualified research and development company may be taxed at approximately 1% of market value in perpetuity.

Property Tax Incentive Detail

There are several programs, both at the local and state level, that are currently in place that can significantly reduce property tax liability. These programs either reduce the taxable value of property or apply a reduced tax rate to the property's assessed value.

New or Expanding Industries Property Tax Incentive (Butte-Silver Bow Determined)

A new or expanding industries option is available at the local government level. If approved by the local governing body (City and County of Butte-Silver Bow), property used by certain new or expanding industries is eligible for a reduced taxable valuation (up to 50% of its taxable valuation for the first five years) during the first nine years after construction or expansion. This incentive only applies to the number of mills levied and assessed for the local high school district and elementary school district and to the number of mills levied and assessed by the governing body approving such benefit.

In effect, this tax break extends over a longer period of time, but is at a lesser amount per year than the previous tax break.

This incentive would result in a .986% effective tax rate of the market value of the real property for the first five years of operations, and would also result in an effective tax rate of 1.53% of the business equipment for the first five years of operations. In operational years six through nine, the effective tax rate for real property would rise incrementally from a range of 1.098% in year six to 1.43% in year nine. The tax on business equipment for operational years six through nine would rise incrementally from a range of 1.70% in year six to 2.225% in year nine. Beginning the tenth year of operations, all property would be taxed at the regular effective tax rate of 1.54% for real property and 2.39% for business equipment. It should be noted that these figures do not account for depreciation of buildings and equipment. These calculations assume a fixed value of property and a fixed property tax millage level.

This local tax break cannot be used in conjunction with the previous State-approved tax break. Likewise, this tax break is not compatible with use with the TIFID incentives described above.