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Montana 2021 Legislature

Lawmakers Consider Expanding Business Equipment Tax Exemption Or Axing Tax

Combines harvest a corn field in Grand Island, Neb.
Combines harvest a corn field in Grand Island, Neb.

The Montana House Thursday offered its support to a bill that would exempt thousands of businesses from paying taxes on equipment, a major priority for Gov. Greg Gianforte. Lawmakers were also briefed on a proposal that would get rid of the tax entirely.

Bill sponsor and Republican Rep. Josh Kassmier of Fort Benton said his bill would provide needed relief for businesses battered by COVID-19.

“It’s a broad base tax reduction. It’s going to help farmers, ranchers, restaurants, so many more businesses in Montana," Kassmier said.

Currently, state tax code exempts the first $100,000 of a business’ equipment and charges a 1.5% rate on up to $6 million of additional equipment. House Bill 303 would raise the exemption ceiling to $200,000.

Roughly two-thirds of House members endorsed the proposal on second reading Thursday. It’s expected to pass third reading Friday and move to the Senate.

Lawmakers under both Republican and Democratic governors have chipped away at the business equipment tax in recent decades.

Now, House Bill 303 is among a handful of tax reform proposals central to Gianforte’s proposed budget and Montana Comeback Plan.

A legislative fiscal analysis estimates the bill would provide relief to about 4,000 businesses and lower equipment tax revenue by about $4 million per year.

That money is currently split between state and local governments, including cities and school districts. Under the bill, state General Fund dollars would reimburse local governments on lost tax revenue.

Democratic Rep. Mary Ann Dunwell of Helena opposed House Bill 303, saying it doesn’t provide targeted relief.

“We can do more to increase wages, lower taxes and create jobs for Montana working families. This bill leaves those families by the wayside in favor of cuts for big business," Dunwell said.

Also Thursday, Republican Rep. Brandon Ler of Savage introduced a bill that would get rid of the business equipment tax altogether.

Bob Story with the Montana Taxpayers Association was among House Bill 372’s opponents. He said it would cost the state about $100 million per year in lost revenue.

No one testified in favor of the proposal.

The House Taxation Committee will vote on House Bill 372 on Friday.

Kevin Trevellyan is Yellowstone Public Radio's Report For America statehouse reporter.