Corporate Tax Incentives

The following information provides the incentives classified under corporate license tax:

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Alternative Energy Producers Credit (15-32-402, MCA)

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 This limitation is also no longer in effect for investments in a commercial system located on state trust land.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 Conversion Credit (15-31-137, MCA)

Eligibility: An individual, corporation, partnership or small business corporation as defined in MCA 15-30-3301 is allowed a tax credit against taxes imposed by MCA 15-30-2103 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

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

Eligibility: Individual, corporation, peatnership or small business corporation
Qualifiying Expenditures: The cost of investments in depreciable property for contructing 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:
- Owner: 15% of the costs of the storage and blending quipment 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

Capital Gains and Dividends from Small Business Investment Company Tax Exemption (15-33-101 through 15-33-106, MCA)

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

Contractor's 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 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 Increasing Research Activities (15-31-150, MCA)

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

Empowerment Zone Tax Credit (15-31-134, MCA)

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:
- 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: 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 (15-32-103, MCA)

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.

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

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: A taxpayer constructing a new residence
Qualifying Expenditures: Installation cost including such costs but not limited to, trenching, well drilling, casing, ground source pumps, ductwork, and design and labor.
Benefit: The maximum credit for the installation of a geothermal system by a taxpayer constructing a new residence cannot exceed $1,500. The unused amount may be carried forward for seven succeeding tax years.
Form: ENRG-A

Historic Buildings Preservation Credit (15-31-151, MCA)

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 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 for the fee charged by a local government unit.
Benefit: The incentive was enacted to encourage local economic development.
Form: IUFC

Insure Montana Small Business Health Insurance Credit (33-22-2006, MCA)

Eligibility: A business that received a tax credit from the Insure Montana Small Business Health Insurance program.
Benefit: A credit may be claimed for the total credit amount issued to the business. If you are a pass-through entity, the credit amount is 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. These must be added back at two times your tax credit.

Mineral and Coal Exploration Incentive Credit (15-32-501, MCA)

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 and MINE-CRED

Montana College Contribution Credit (15-30-2326, MCA, 15-31-135, MCA, 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

Montana Dependent Care Assistance Credit (15-31-131, MCA, 15-31-133, MCA)

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:
- 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.
- 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
- 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 (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 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 (15-31-124, MCA)

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.

Oilseed Crushing Facility Credit (15-32-702, MCA)

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 Contribution Credit (15-31-161 and 15-31-162, MCA)

Eligibility: Individual, corporation, small business corporation, partnership, or a limited liability company.
Qualifying Expenditures: Gifts to a qualified charitable endowment, as defined in MCA 15-30-2327.
Benefit: 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.
The credit is nonrefundable; may not exceed the taxpayer's 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).

Recycle Credit/Deduction (15-32-602, MCA, 15-32-603, MCA)

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 (15-31-103, MCA)

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.

Temporary Emergency Lodging Credit (15-30-2381, MCA and 15-31-171, MCA)

Eligibility: Licensed establishments that provide short-term emergency lodging under the Temporary Emergency Lodginq 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 Temporary Emergency Lodging Program
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