Individual Income Tax Incentives

The following information provides the incentives classified under individual income tax. See Schedule V.

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Adoption Credit (15-30-194, MCA)

Eligibility: Individual who finalizes the adoption of an eligible child.
Benefit: The amount of the credit is $1,000 per child. If the amount of the credit exceeds your tax liability, you can carry forward for five succeeding tax years.
Form: Attach Federal Form 8839.

Alternative Energy Production Credit (15-32-401 thru 15-32-406, MCA)

Eligibility: Individual, corporation, partnership or small business corporation
Qualifying Expenditures: Investment of $5,000 or more in depreciable property under the Internal Revenue Code for a commercial system or a net metering system located in Montana that generates energy by means of an alternative renewable energy source.
Benefit: The credit is 35% of the 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. (Please refer to MCA 15-32-402 and 404 for additional qualifications necessary regarding investments located on a Montana Indian reservation).
Form: AEPC

Alternative Energy System Credit (15-32-201-202, MCA)

Eligibility: Resident individuals
Qualifying Expenditures:

Nonfossil form of energy generation system such as wind energy, solar energy, solid waste, and decomposed organic waste in your principal home.
Low emission wood or biomass combustion device, such as a pellet or wood stove in your principal home.

Benefits: The credit for the installation of a recognized nonfossil form of energy generation system in the taxpayer's principal dwelling is the cost of the system, including installation costs, less grants received, not to exceed $500 per taxpayer against the income tax liability imposed. Any excess credit not claimed in the year of installation may be carried forward for four succeeding tax years.
Form: ENRG-B

Alternative Fuel Conversion Credit (15-30-164, MCA and 15-31-137, MCA)

Eligibility: Individual, corporation, partnership or small business corporation
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

Biodiesel Blending and Storage Credit (15-32-702-703, MCA)

Eligibility: Individual, corporation, partnership or small business corporation
Qualifying Expenditures: The cost of investments in depreciable property for constructing or equipping a facility, or both, in Montana to be used for biodiesel or biolubricant production.
Benefit: The amount of the credit that may be claimed is:
- Owners – 15% of the costs of the storage and blending equipment purchased;
- Special fuel distributors – 15% of the costs, up to a total of $52,500;
- Owner or operator of a motor fuel outlet – 15% of the costs, up to a total of $7,500

Form: BBSC

College Contribution Credit (15-30-163, MCA, 15-31-135 through 15-31-136, MCA)

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

Contractors Gross Receipts Tax Credit (15-50-207, MCA)

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 individual, corporate license or corporate income taxes.
Unused Contractors Gross Receipts Tax Credit can be carried forward for up to five subsequent tax years.

Dependent Care Assistance Credits (15-30-130, MCA, 15-31-133, MCA, 15-30-186, MCA, and 15-31-131, MCA)

Eligibility: An employer carrying on a business, trade, occupation or profession in Montana
Qualifying Expenditures: (1) Amounts 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; (2) amounts paid or incurred for providing daycare information and referral services; or (3) for daycare facilities acquired by an employer and placed in operation between January 1, 2001 and December 31, 2005, there is a credit allowable to an employer based on the amounts paid or incurred during the tax year by the employer to acquire, construct, reconstruct, renovate or otherwise improve real property so that the property may be used primarily as a daycare facility.
Benefit: (1) The credit is 25% of the amount paid or incurred by the employer for dependent care assistance during the taxable year with a limit of $1,575 per employee. (Any unused credit may be carried forward five years) (2) The credit is 25% of the amount paid or incurred for providing dependent information and referral services, or (3) the amount of daycare facility credit is the lesser of (a) $2,500 multiplied by the number of dependents the daycare facility is designed to accommodate at the end of the first tax year for which the credit is claimed, (b) 15% of the cost of the acquisition, construction, reconstruction, renovation or other improvement, or (c) $50,000 (any unused credit may be carried forward for nine succeeding years).
Form: DCAC

Elderly Care Credit (15-30-128, MCA)

Eligibility: An individual may be eligible to receive a credit for paying certain expenses of an elderly family member who is 65 or older or has been determined disabled for Social Security purposes.

Benefit: The credit is limited to $5,000 for a single family member; $5,000 for a joint return; $2,500 per person filing a married separate return. The combined total credit of two or more family members cannot exceed $10,000. No carry back or carry forward of the credit is allowed.
Form: ECC

Elderly Homeowner/Renter Credit (15-30-171 through 15-30-179, MCA)

Eligibility: An individual who has:

Reached age 62 or older during the tax year.
Resided in Montana for 9 months or more of the period.
Occupied one or more dwellings in Montana as an owner, renter, or lessee for 6 months or more.
Less than $45,000 of gross household income.

Qualifications: An individual may qualify for the elderly homeowner/renter credit by owning or renting a residence. For property owners, the credit is computed on the amount of property tax assessed against your home. For renters, the credit is computed on the rent equivalent tax paid.
Benefits: The credit may not exceed $1,000. If the amount of the credit exceeds the tax liability, the excess amount is refunded. The credit may be claimed even though the individual has no income tax filing responsibility.
Form: 2EC

Empowerment Zone Tax Credit (7-21-3710, MCA, 15-30-182, MCA and 15-31-134, MCA)

Eligibility: Individual, corporation, small business corporation, and partnership.
Qualifying Expenditures:

Business must be located in a facility within the empowerment zone;
Less than 10% of the business is from retail sales of tangible personal property, other than that manufactured in the facility;
Shall increase employment within the empowerment zone from employees who:

work at least 1,750 hours per year in permanent employment intended to last at least 3 years;
were not employed in the business within the 12 preceding months;
at least 35% are residents of the county at the time of their employment;
are provided a health benefit plan of which at least 50% of the premium is paid by the business;
are paid for job duties performed at the empowerment zone location

Benefit: The credit 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. The credit may be carried forward seven years and carried back three years.
See Schedule V

Energy Conservation Installation Credit (15-30-125, MCA and 15-32-109, MCA)

Eligibility: Individual Montana residents can claim the credit for energy conservation investments made to a home or other building.
Qualifying Expenditures: Montana law defines an eligible expense as "the installed cost of materials and equipment which reduce the waste or dissipation of energy, or reduce the amount of energy required to accomplish a given amount of work."
Benefit: The credit is equal to 25% of expenses up to a maximum credit of $500. Two or more people may each qualify for the credit, as long as the building in which the investment is made is owned by all of the people claiming the credit. For example, a married couple who jointly own their home may each claim a credit up to $500 each or $1,000 for the couple.
Form: ENRG-C

Film Employment Production Credit (15-31-901, MCA through 15-31-911, MCA)

You can claim a nonrefundable or refundable credit against your income tax liability for employing residents of Montana in a state-certified production. The credit is equal to the sum of 14% of the first $50,000 or less that was compensated to each Montana resident who was employed in a state-certified production.
When you claim this credit, you should make a one-time election by either:

Applying the credit against your income tax liability and carrying forward any unused credit to be applied against your income tax liability in subsequent years, or;
Applying the credit against your income tax liability with any unused credit refunded to you.

Form: FPC

Film Qualified Expenditures Credit (15-31-901 through 15-31-911, MCA)

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You can receive a refundable film qualified expenditures credit for expenditures made in Montana in connection with a state-certified production. The credit is equal to 9% of the total qualified expenditures incurred in connection with the state-certified production.
Expenditures that qualify are expenses that occurred in Montana and that are directly related to your production. These expenses include lodging expenses, restaurant and food expenses, location fees, lumber and construction materials, rental, or production equipment and vehicles and supplies and materials that are used in the production.

Form: FPC

Geothermal System Credit (15-32-115, MCA)

Eligibility: Resident individuals
Qualifying Expenditures: Installation cost including such cost, but not limited to, trenching, well drilling, casing, ground source pumps, ductwork, and design and labor.
Benefits: The maximum credit for the installation of a geothermal system in a taxpayer's principal dwelling cannot exceed $1,500. The unused amount may be carried forward for seven succeeding tax years.
Form: ENRG-A

Health Insurance for Uninsured Montanans Credit (15-30-129, MCA and 15-31-132, MCA)

Eligibility: Montana employers who:

Have been in business in Montana for at least 12 months
Employ 20 or fewer employees working at least 20 hours per week

Qualifying Expenditures: Premiums for health 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

Historical Property Preservation Credit (15-30-180, MCA and 15-31-151, MCA)

Eligibility: Individual, corporation, small business corporation or partnership
Qualifying Expenditures: Qualified rehabilitation expenditures, as provided in 26 U.S.C 47 and as it may be amended
Benefit: For individuals or businesses, 25% of the federal credit allowed. An alternative credit is allowed for individuals, equal to 20% of the cost of creating a conservation easement and for the diminishing value of the historic property, including buildings and structures that result from placing a conservation easement on the property. This is a non-refundable credit and has carry forward provisions for six succeeding tax years.
Form: Federal Form 3468

Increasing Research Activities Credit (15-30-168, MCA and 15-31-150, MCA)

Eligibility: Individual, corporation, small business corporation, partnership, limited liability partnership or limited liability company.
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, except that the percentage rate is 5% for Montana purposes.
Benefit: The credit is nonrefundable but maybe carried back two years and forward 15 years.
Form: RSCH

Infrastructure Users Fee Credit (17-6-316, MCA)

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 against the tax liability for the fee charged by a local government unit.
Benefit: The incentive was enacted to encourage local economic development.
See Schedule V

Insure Montana Small Business Health Insurance Credit (3-22-2006, MCA)

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If you were the owner of a business that received a tax credit from the Insure Montana Small Business Health Insurance program, the amount of credit you may claim is the total credit amount issued to business multiplied by your ownership percentage. Attach a copy of the most recent certificate from the State Auditor’s Office providing the amount of tax credit the business received.
Insurance premiums paid for these policies are not allowed as a deduction.

See Schedule V

Mineral Exploration Incentive Credit (15-32-503, MCA)

Eligibility: Individual, corporation, partnership, small business corporation or limited liability company engaged in mineral exploration in the state.
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-CRED

Oilseed Crushing Facility Credit (15-32-701, MCA)

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You can claim a credit for the cost of investments in qualifying depreciable property in Montana used to crush oilseed crops for the purpose of making biodiesel fuel or biolubricant. The credit is equal to 15% of your cost in the property, up to a maximum credit of $500,000. It will be applied against your income tax liability in the tax year that your facility begins processing the oilseed or manufacturing a product from the oilseed.
The credit can be carried over for seven succeeding years if the facility is crushing oilseed during that tax period.
Form: OSC

Qualified Endowment Credit (15-30-165 through 15-30-167, 15-31-161, 15-31-162, MCA)

Governor's Task Force on Endowments and Philanthropy

Eligibility: Individual, corporation, small business corporation, partnership, or a limited liability company. This "allowable contribution" for the purposes of the qualified endowment credit is a charitable gift made to a qualified endowment. The contribution from an individual to a qualified endowment must be by means of a planned gift as defined in 15-30-165, MCA. A contribution from a corporation, small business corporation, estate, trust, partnership, or limited liability company may be made by means of a planned gift or may be made directly to a qualified endowment.
Benefit:
For Planned Gift:

Gift Date	% of Present Value	Maximum Credit

8-28-02 through 6-30-03	30%	$ 6, 600
7-1-03 through 12-31-13	40%	$10,000

For Qualified Charitable Gift:

Gift Date	% of Present Value	Maximum Credit

8-28-02 through 6-30-03	13.3%	$ 6,600
7-1-03 through 12-31-13	20%	$10,000

The credit is nonrefundable and 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 15-30-121, 15-30-136 or 15-31-114.
Form: QEC

Recycling Credit (15-32-602, MCA and 15-32-603, MCA)

Eligibility: Individual, corporation, partnership or small business corporation
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

Rural Physicians Credit (15-30-188 through 15-30-191, MCA)

Eligibility: A physician, who commences practice in an area without a 60 bed hospital located within 30-mile radius, may claim a credit against individual income tax.
Qualifying Expenditures: The credit is $5,000 a year and is limited to $20,000 for four consecutive years. The credit may be used only to offset tax liability.
Benefit: The credit may be claimed for each of four consecutive years beginning with the year in which his/her practice starts in a qualifying area. In order to qualify for the credit, a physician must have located his or her principal place of practice to a rural area and be opened to the general public. The physician must maintain the practice for at least 9 months of the taxable year in which the credit is claimed. Credit may not be used for any taxable year in which the physician ceases to practice in an area described above.
As a result of 2007 changes in the Montana Legislature, 2007 was the last year you could have established a practice that would qualify for the credit.
See Schedule V

Temporary Emergency Lodging Credit (15-30-196, MCA and 15-31-171, MCA)

Eligibility: Licensed establishments that provide short-term emergency lodging under the Temporary Emergency Lodging Program may claim a refundable tax credit.
The program helps provide lodging for individuals or families who have been displaced from their residence and have been referred to the establishment by a charitable organization approved by the Montana Department of Public Health and Human Services. For additional information, please visit their website at http://www.dphhs.mt.gov/PHSD/Food-consumer/emergency-lodging.shtml.
Benefit: The credit is $30 for each day of lodging provided by the establishment with a maximum of five nights’ lodging for each individual. No carry forward or carry back is allowed.
Form: TELC

Department of Revenue