Business and agricultural groups are lining up behind a proposal to reform the state’s business equipment tax to help small businesses, as well as family farms and ranches.

Sponsored by Rep. Josh Kassmier, R-Fort Benton, House Bill 212 cuts taxes for Montana's small business owners, family farmers, and family ranchers by expanding the business equipment tax exemption from $300,000 to $1 million.

The bill is a priority in Republican Gov. Greg Gianforte's budget proposal.

Montana’s business equipment tax forces businesses, including family farms and ranches, to reallocate resources they would otherwise invest in their operation and create jobs with to pay a tax on the equipment and machinery they need to operate.

The business equipment tax also imposes a costly compliance burden, with businesses required to inventory and report their equipment to the state each year.

Reducing the burden of the business equipment tax on Montanans, this bill encourages business investment and promotes job creation.

In 2021, the governor worked with Rep. Kassmier to increase the business equipment tax exemption from $100,000 to $300,000.

Taken together, these reforms eliminate the business equipment tax burden for more than 5,000 small businesses, farms, and ranches.

Show of support

Many testified in support of the bill before its committee Jan. 17.

Todd O’Hair, President and CEO of the Montana Chamber of Commerce: “From neighborhood print shops to farms and ranches, lowering the tax on equipment necessary to run a business allows those businesses to reinvest in their success and drive economic development for their local communities. Approximately 5,000 Montana businesses will benefit from lowering the business equipment tax which makes this a top priority for the Montana Chamber of Commerce, and we applaud the business-minded approach Governor Gianforte is taking to grow Montana’s economy.”

Ronda Wiggers, Montana State Director of the National Federation of Independent Businesses: “Over 4,000 small businesses in the State of Montana will be directly affected by this. This will be the businesses who will no longer have to fill out this paperwork. They greatly appreciate this bill, and they appreciate the governor’s office supporting the efficiency in taxing and decreasing taxing.”

Brad Griffin, President of the Montana Retail Association: “On behalf of Montana equipment dealers, retailers, and restaurateurs, we proudly support increasing the business equipment tax exemption to $1 million. Cutting taxes for Montana small businesses, this proposal will help protect their bottom lines, invest in their operations, and create more jobs.”

Cary Hegreberg, President and CEO of the Montana Bankers Association: “Banks don’t pay much in business equipment tax themselves, but they finance tens of thousands of businesses throughout the state they do pay these taxes. A lot of those small businesses, farms, and ranches are experiencing sticker shock when they come in to renew their loans. This bill will help some of those small businesses relieve the burden that inflation is causing not only on the price of goods that they purchase and labor that they pay but on financing costs.”

Cyndi Johnson, President of the Montana Farm Bureau Federation: “The farmer and rancher – members of the Montana Farm Bureau Federation – appreciate Governor Gianforte’s commitment to making Montana more business friendly. HB 212 will allow and encourage farmers and ranchers to invest in equipment, making their family operations more productive and efficient.”

Tryg Koch, Past President of Montana Grain Growers Association: “We, as producers, are always looking for ways to keep our food cheap, and this is a way to pay less taxes and keep up with the times.”

Krista Lee Evans, on behalf of Montana Agricultural Business Association and Montana Grain Elevator Association: “By reducing the amount of business equipment tax we have to pay, that makes additional funds available for us to invest in our business and increase innovation and diversification. This is fantastic opportunity for not only our businesses but the growers as well.”

Sarah Converse, Executive Director of the North Central Montana Economic Development District: “Increasing the business equipment tax exemption will benefit our agricultural sector and small businesses. These reforms are a great step forward to supporting the business economy, keeping Montana competitive, and reducing the tax burden for Montana residents.”

Dan Brooks, Director of Business Advocacy for the Billings Chamber of Commerce: “One of the Billings Chamber’s priorities is to reduce the cost of doing business in Montana, and we’ve been longtime supporters of reducing the business equipment tax. In Yellowstone County, we have about 502 entities with business equipment tax liability in tax year 2022, so raising the threshold of the exemption to $1 million will fully exempt over half of those entities. We greatly appreciate the governor’s emphasis on reducing the cost of doing business in Montana.”

Lorraine Clarno, President and CEO of the Kalispell Chamber of Commerce: “We’ve identified over 120 thriving and growing manufacturers in our community, and we want to see that continue and allow them additional resources through this bill to do more high-paying job creation. We ask you to support this as a great opportunity to also make Montana more competitive with neighboring states.”

Jennifer Hensley, on behalf of Fidelity Diagnostics: “[Fidelity Diagnostics Laboratory] employs 35 highly-trained, highly-paid, highly-educated individuals, and they have $1.8 million in complex, scientific equipment. This would go a long way in helping them employ more people and expand their business more predictably.”

Henry Kriegel, Legislative Liaison for Americans for Prosperity-Montana: “At Americans for Prosperity, we’re all about removing barriers for success…We see this business equipment tax as a barrier, and we’d like to see that removed. We view this bill as positive step in the right direction to allow business owners to retain their hard-earned income and invest back into their businesses to create more value in their communities and provide a quality service or product.”

Source: Office of Montana Gov. Greg Gianforte