Equipment Tax Reforms Could Attract Businesses
By David Beasley, The Center Square
Gov. Greg Gianforte’s plan to provide more relief from the state’s business equipment tax could attract more businesses to Montana, according to one small business advocacy group.
The governor said earlier this month that he wants more reforms to the business equipment tax when the legislature convenes next year. In 2021, lawmakers raised the tax exemption from $100,000 to $300,000, which provided 3,400 businesses with tax relief, according to the governor’s office.
“Taxing critical business equipment makes it harder to grow a small business and is a wet blanket on job creation,” Gianforte said in a statement.
“In 2023, we want to build on that success, further reforming the business equipment tax so small business owners can grow their operations and create more good-paying Montana jobs,” he added.
The price of equipment needed to operate businesses has increased with inflation, according to Ronda Wiggers, Montana state director for the National Federal of Independent Business.
“If you are a store owner who buys cabinets, or a farmer who buys a combine, or you buy freezers and refrigerators for your restaurant, in the state of Montana we tax those,” she told The Center Square. “We put a taxable value on that, and we tax them. Although the taxable value depreciates over time, you don’t just pay it once. You pay it every year. It’s an ongoing tax.”
When the state eliminated the first $100,000 of value from taxation a few years ago, “that took care of a lot of our small businesses,” she said. “Most of the stores, for example, probably don’t have over $100,000 worth of display cases.”
Since local governments obtain revenue from the equipment tax, the state last year covered any losses they might incur from raising the exemption to $300,000, Wiggers said.
Gianforte has not yet detailed what his proposal will be for raising the exemption this year, although there has been some speculation he may support increasing it to $500,000, according to Wiggers.
A higher exemption could attract more equipment-intensive businesses like in the manufacturing sector, Wiggers noted.
“When you are trying to attract those kinds of businesses to the state, they are looking at the bottom line,” she said. “Having an equipment tax in one state and not having it in another would very much affect something like manufacturing.”