As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Montana. I was able to speak with some Montana economic development professionals and learned some of their details (Montana Business Incentives site click here).
Montana offers a variety of tax credits and abatements, grants and low-interest financing along with technical assistance programs that are available to both new and existing businesses. CNBC ranked Montana #5 for the cost of doing business in their 2013 America’s Top States for Business survey, and the Tax Foundation ranked Montana #7 for overall business tax climate. One big factor: Montana has no sales tax of any kind!
Incentives and credits include:
- The Empowerment Zone Tax Credit allows for eligible businesses located in such zones a $500 credit against income tax liability for each qualifying employee the first year, $1,000 for the second year 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 the insurance premium tax.
- New or Expanding Industry Wage Credit: A manufacturing corporation may receive a corporation license tax credit of 1% of wages paid to new employees for the first three years of operation and expenses.
- The Incumbent Worker Training Program is a competitive grant program, that provides grant funding to help eligible Montana small businesses train their existing (incumbent) workers. It also helps preserve existing jobs for Montana residents. Training can be customized to meet specific needs.
- R & D Tax Credits & Tax Exemptions provide a 5% tax credit on qualified R&D expenditures. The credit is nonrefundable but may be carried back two years and forward fifteen years. All net income earned form research and development activities are exempt from corporate license tax during a firm’s first 5 taxable years of activity within the state.
Compared to Georgia, Montana has:
- Similar corporate and personal income tax rates, which means that state tax credits are beneficial to business owners.
- A far narrower range of incentives.
- No sales taxes
To summarize, Montana is not nearly as competitive as Georgia for business tax incentives. They rather emphasize their grant programs, low-interest financing programs, and overall low cost of doing business. But with their incredible scenery, weather, and great outdoors, it’s a pretty attractive place to do business.
Do any of your clients have Montana connections? If so, Montana professionals will be very helpful in finding incentives. And remember to tell them to pack their hiking boots!