Corporate Tax Incentives
The following information provides the incentives classified under corporate license tax.
Alternative Energy Producers Credit (MCA 15-32-402)
- Eligibility: Individual, corporation, partnership or small business corporation
- Qualifying Expenditures: Investment of $5,000 or more in certain depreciable property qualifying under section 48(a) of the Internal Revenue Code of 1986, as amended, for a commercial or net metering system located in Montana which generates energy by means of an alternative renewable energy source.
- Benefit: The credit is 35% of the eligible expenditures but is reduced by the amount of the federal credits so the effective credit does not exceed 60% of eligible costs. The credit must first be claimed in the year in which the asset was placed in service; any excess credit may be carried over up to 7 years.
- For wind energy investments 5 megawatts or larger, which are located within the exterior boundaries of a Montana Indian reservation, the credit may be carried over up to 15 years and the limitation of 60% of eligible costs is eliminated. This limitation is also no longer in effect for investments in a commercial system located on state trust land. (Please refer to MCA 15-32-402 and 403 for additional qualifications necessary regarding investments located on a Montana Indian reservation or on state trust land.) This provision applies for tax years beginning after December 31, 2001.
- Form: AEPC
Alternative Fuel Motor Vehicle Conversion Credit (MCA 15-31-137)
- Eligibility: An individual, corporation, partnership or small business corporation as defined in MCA 15-30-1101 is allowed a tax credit against taxes imposed by MCA 15-30-103 or MCA 15-31-101 for equipment and labor costs incurred to convert a motor vehicle licensed in Montana to operate on alternative fuel.
- Qualifying Expenditures: Equipment and labor costs incurred to convert a motor vehicle licensed in Montana to operate on alternative fuel.
- Benefit: 50% of equipment and labor costs up to $500 for a vehicle less than 10,000 pounds or $1,000 for a vehicle weighing more than 10,000 pounds.
- Form: AFCR
Capital Gains and Dividends from Small Business Investment Company Tax Exemption (MCA 15-33-101 to 15-33-106)
- Eligibility: Any capital gains or dividend income realized by an individual or corporation from an investment in a Small Business Investment Company (as defined by state law)
- Benefit: The capital gains or dividend income is exempt from state individual and corporate income tax
Charitable Endowment Contribution Credit (MCA 15-31-161 and 15-31-162)
- Eligibility: Corporation, small business corporation, partnership, or a limited liability company.
- Qualifying Expenditures: Gifts to a qualified charitable endowment, as defined in MCA 15-30-165.
- Benefit: For eligible companies, the credit is 20% of a charitable gift made to qualified endowments after June 30, 2003 and is not to exceed $10,000. For a planned gift, the credit is 40% of the present value and is not to exceed $10,000.
- Benefit:
- For Planned Gift:
Gift Date % of Present Value Maximum Credit 1-1-02 through 8-27-02 8-28-02 through 6-30-03 7-1-03 through 12-31-13
- For Qualified Charitable Gift:
Gift Date % of Present Value Maximum Credit 1-1-02 through 8-27-02 8-28-02 through 6-30-03 7-1-03 through 12-31-13
- The credit is nonrefundable; may not exceed the taxpayers tax liability and the credit is not subject to a carry back or carry forward. The credit cannot be claimed on any portion of the gift taken as a deduction under MCA 15-31-114 (deductions allowed in computing income).
Contractor's Gross Receipts Tax Credit (MCA 15-50-207)
- Eligibility: Contractors, and some sub-contractors, performing public construction work under a federal, state or local government contract
- Qualifying Expenditures: An additional license fee equal to 1% of the gross receipts for government contracts is paid.
- Benefit: The credit can be used to offset the tax liability of corporate license or corporate income taxes.
- Unused Contractor's Gross Receipts Tax Credit can be carried forward for up to five subsequent years.
Credit for Contributions to Housing Trust Fund (MCA 90-6-133)
- Credit terminated December 2004.
Credit for Increasing Research Activities (MCA 15-31-150)
- Eligibility: Individual, corporation, small business corporation, partnership, limited liability partnership or limited liability company. Applies to tax years beginning after December 31, 1998. This credit was enacted by the 1999 legislature.
- Qualifying Expenditures: Increases in qualified research expense and basic research payments for research conducted in Montana. Credit is determined in accordance with section 41 of the Internal Revenue Code (IRC), 26 U.S.C. 41 and as it may be amended, with exception that the applicable rate is 5% for Montana purposes.
- Benefit: The credit is equal to 5% of the increase in qualified research expense and basic research payments for research in Montana. The credit is nonrefundable but maybe carried back two years and forward 15 years.
- Form: RSCH
Developmental Disability Account Credit (MCA 15-30-187)
- Eligibility: Individual, corporations, partnership or small business corporations
- Qualifying Expenditures: a donation may be made to a state special revenue account established to provide services to individuals with developmental disabilities. A taxpayer claiming a credit under this section may not claim a deduction under 15-30-121(1), 15-30-136(2), or 15-31-114 for the contribution for which a credit is claimed.
- Benefit: 30% of the amount contributed to the account up to a maximum of $10,000 may be claimed as a credit against taxes imposed by 15-30-103 or 15-31-101, MCA. There is no carryforward or carryback. The credit must be applied in the year the donation is made, as determined by the taxpayer's accounting method. Credit terminated December 31, 2007.
Empowerment Zone Tax Credit (MCA 15-31-134)
- Eligibility: Individual, corporations, small business corporations, pass-through entities and partnerships. Local governments can establish empowerment zones to encourage economic development. Among other criteria, unemployment within the empowerment zone area must be at least 150% of the statewide average unemployment or poverty rate in the 2 years prior to creation of the empowerment zone.
- Qualifying Expenditures:
1. Business must be located in a facility within the empowerment zone;
2. Less than 10% of the business is from retail sales of tangible personal property, other than that manufactured in the facility;
3. Shall increase employment within the empowerment zone from employees who;
a. work at least 1,750 hours per year in permanent employment intended to last at least 3 years;
b. were not employed in the business within the 12 preceding months;
c. at least 35% are residents of the county at the time of their employment;
d. are provided a health benefit plan of which at least 50% of the premium is paid by the business;
e. are paid for job duties performed at the empowerment zone location; - Benefit: for individuals or corporations meeting eligibility criteria, the credit against income tax liability for each qualifying employee is $500 for the first year of employment; $1,000 for the second year of employment and $1,500 for the third year of employment. If the credit exceeds the taxpayers' income tax liability, the credit may be carried forward 7 years and carried back 3 years. In addition to the income tax credits, the employer is also entitled to a credit against the taxes imposed by 33-2-705, MCA, the insurance premium tax. The credits against the tax are the same as listed above.
Energy Conservation Investment (MCA 15-32-103)
- Eligibility: Capital investment in a building for energy conservation purposes that is not financed by state, federal, or private grant funds for energy conservation
- Benefit: The taxpayer may deduct from gross corporate income up to $1,800 for residential investment. Alternatively, $3,600 may be deducted for commercial building investment.
Historic Buildings Preservation Credit (MCA 15-31-151)
- Eligibility: Corporations, small business corporations or partnerships
- Qualifying Expenditures: Qualified rehabilitation expenditures, as provided in 26 U.S.C 47 and as it may be amended
- Benefit: Twenty-five percent of the federal credit allowed. This is a non-refundable credit. Carry forward provisions for 7 years.
- Form: Attach Federal Form 3468
Infrastructure User Fee Credit (MCA 17-6-316)
- Eligibility: Businesses using infrastructure improvements financed through Board of Investment grants to local government. The local government may charge a fee for use of the infrastructure.
- Qualifying Expenditures: The business may take a credit for the fee charged by a local government unit.
- Benefit: The incentive was enacted to encourage local economic development.
Interest Differential Credit (MCA 15-32-107)
- Eligibility: Public utility or financial institution
- Qualifying Expenditures: Loans, prior to July 1, 1995, to be used for energy conservation purposes
- Benefit: A credit may be claimed for the difference
between the interest it actually receives and the interest it would have
received at the prevailing rate for home improvement loans. The credit to be
claimed may not exceed:
1. $750,000 per year for a utility
2. $2,000 per year for a financial institution
Investment Tax Credit (MCA 15-31-123)
- Eligibility: A small business as defined in MCA 15-31-123 is allowed a credit for the purchase and installation of certain qualified, depreciable property described in section 38 of the Internal Revenue Service Code of 1954 or successor codes.
- Qualifying Expenditures: Property described in section 38 of Internal Revenue Service Code of 1954 or its successor code that is placed in service in Montana and is used in the production of Montana income.
- Benefit: 5% of the amount of the credit determined under section 46(a)(2) of the Internal Revenue Service Code of 1954 or its successor code, up to $500.
Mineral Exploration Incentive Credit (15-32-501)
- Eligibility: Individual, corporation, partnership, small business corporation or limited liability company engaged in mineral exploration in the state. Applies to tax years beginning after December 31, 1998. This credit was enacted by the 1999 legislature.
- Qualifying Expenditures: Certified expenditures for mining exploration activities, which represent costs incurred for activities in direct support of exploration activity conducted at a specific exploration site for the purpose of determining the existence, location, extent or quality of a mineral or coal deposit. The credit applies to activities associated with both new mines and mines that are being reopened. These expenditures must receive prior certification by the department in order to qualify for the credit.
- Benefit: A credit may be claimed for certified expenditures of mining exploration activities not to exceed 50% of the tax liability for the tax year that is related to production from the mining operation at which the exploration activities occurred. If a portion of the credit is not applied during a tax year, it may be carried forward and applied during a subsequent tax year.
- Forms: MINE-Cert
Montana Capital Company Credit (MCA 90-8-202)
- Eligibility: Corporations
- Qualifying Expenditures: Investment in a qualified Montana capital company
- Benefit: The credit is equal to 50% of the investment, up to $150,000 per taxpayer. Credit is allowed for the year in which the investment is made. Excess credit may be carried back three years and forward 15 years. NOTE: All tax credits have been allotted. No new tax credits for capital companies are available.
Montana College Contribution Credit (MCA 15-30-163, 15-31-135, 15-31-136)
- Eligibility: Individual, corporation, partnership or small business corporation
- Qualifying Expenditures: Contributions to general endowment funds of the Montana University System foundations or to the general endowment fund of a Montana private college or its foundation
- Benefit: The credit is equal to 10% of the aggregate amount of charitable contributions made by the taxpayer during the tax year. The maximum credit that a taxpayer may claim in a year is $500. No carry back or carry forward is permitted.
- Form: CC
Montana Dependent Care Assistance Credit (MCA 15-31-131, 15-31-133)
- Eligibility: An employer carrying on a business, trade, occupation or profession in Montana
- Qualifying expenditures: There are three sections concerning expenses paid or incurred for dependent care assistance actually provided to or on behalf of an employee. A registered or licensed day-care provider must have furnished the assistance.
- Benefits: (1) Day Care Facilities Credit is available for investments made between January 1, 2001 and December 31, 2005 related to acquiring, constructing, reconstructing, renovating, or improving property for the primary use of providing a day-care facility for your employees. The facility must have been placed in operation before January 1, 2006 and must have been in operation on the last day of the tax year the credit is claimed. You are allowed to claim one-tenth of the total amount of your credit determined in the first year you are eligible for the credit along with any day-care facility tax credit carryover. Any unused credit is carried forward 9 succeeding years. (2) Dependent Care Assistance Credit is 25% of the amount paid or incurred by the employer during the taxable year with a limit of $1,575 per employee, or (3) Dependent Care Information and Referral Service is 25% of the amount paid or incurred for providing day care information and referral services. Any unused credit may be carried forward five years.
- Form: DCAC
Montana Disability Insurance for Uninsured Montanans Credit (MCA 15-31-132)
- Eligibility: Montana employers who:
1. Have been in business in Montana for at least 12 months
2. Employ 20 or fewer employees working at least 20 hours per week - Qualifying Expenditures: Premiums for disability insurance on behalf of employees if at least 50% of each employee's premium is paid by the employer
- Benefit: The credit is equal to $25 a month for each employee (up to 10 employees maximum) if the employer pays 100% of an employee's premium, or a proportionate amount of $25 if the employer pays less than 100% of an employee's premium. The credit may not exceed 50% of the premium cost for each employer. The credit may not be claimed for a period of more than 36 consecutive months. A tax credit may not be granted to an employer or its successor within 10 years of the last consecutive credit claimed. The credit is nonrefundable and may not be carried forward or back.
- Form: HI
New/Expanded Industry Credit (MCA 15-31-124)
- Eligibility: Manufacturing companies
- Qualifying Expenditures: Increase total full time employment by at least 30%
- Benefit: The total amount of the credit is 1% of the total wages paid to new employees. Credit is available during the first three years following initiation or expansion of the manufacturing operation. Credit limited to the year in which it is earned.
Primary Sector Business Workforce Training Act (2003 Legislation, HB564)
- Eligibility: Individuals, corporation, partnership or
association providing new full-time jobs and entering into a grant contract.
Existing full-time jobs that becomes substantially different or that will
require new training as the result of an acquisition of an existing of a
Montana company are also eligible.
1. The grant is provided to employers for the purpose of working with eligible training providers to provide employees with education and training required for jobs in new or expanding primary sector businesses in the state. A seven-person committee allocated to the Governors Office of Economic Development will review and approve the grant applications.
2. Primary sector business means an employer engaged in expanding operations in Montana which adds value to a product, process or export service which creates new wealth and for which at least 50% of the sales occur outside of the state; or a manufacturing company with at least 50% of its sales to other Montana companies that have 50% of their sales outside of the state.
3. A "new job" is a newly created full-time job in an eligible business. It does not mean recalled employees, replacement employees, part-time, seasonal or other jobs that previously existed. - Qualifying Expenditures: A grant of up to $5,000 for
each full-time position or each newly created full-time position can be used
to pay program costs of the primary business training program. Higher grant
awards may be considered under exception circumstances. The training program
must involve at least 10 new jobs.
The average weekly wage of the jobs must meet or exceed the lesser of:
1. Montana's current average weekly wage;
2. The current average weekly wage of the county in which the employees are to be principally located or;
3. The current average weekly wage of the reservation where the job is principally located;
4. The value of employee benefits may be considered;
5. The grant may not exceed an amount greater than the present value of expected incremental tax receipts that are expected over the 10 year period immediately following the grant award; - Benefit: The Department of Revenue will calculate the credit amount based on the gross wages paid by the employer. The grants are repaid based on the "new job credit".
- Credit terminated June 30, 2007.
Recycle Credit/Deduction (MCA 15-32-602, 15-32-603)
- Eligibility: Individual, corporation, partnership or small business corporations
- Qualifying Expenditures: Investments in depreciable equipment or machinery used to collect, process or manufacture a product from reclaimed material or depreciable property that treats soil contaminated by hazardous wastes
- Benefit: A percentage (25% to 5%) of the cost of the property used in Montana. No carry forward or carry back is allowed.
- Form: RCYL
Research and Development Firms Tax Exemption (MCA 15-31-103)
- Eligibility: Research and development firms organized to engage in the business in the state of Montana for the first time. Firms must file applications with the Department of Revenue before the end of the first calendar quarter during which the firm engages in business in Montana.
- Benefit: All net income earned from research and development activities are exempt from corporate license tax during its first five taxable years of activity in Montana.
