Butte’s Tax Laws are Good for Business

 In Butte Business

Montana is a state full of opportunity for entrepreneurs and business developers. According to the 2019 State Business Tax Climate Index, as organized by nationally acclaimed tax experts and researchers of the national nonprofit The Tax Foundation, Montana’s pro-business culture and tax-friendly laws place it well over average for quality of tax climate. In fact, Montana’s tax system is ranked 5th in the United States, given functionality and foundational design.

Montana’s Tax Climate

The Tax Foundation has been working and researching in the US for more than 80 years to inform policymakers, business leaders and citizens of how different states’ tax systems compare to one another. The State Business Tax Climate Index is designed to show how well a state’s tax system is structured as a whole and provide some guidelines for improvement annually. Rather than being concerned with the gross tax revenue produced on a state-to-state basis, the Tax Climate Index evaluates how well each state’s tax system is actually designed and how well it functions in a realistic, day-to-day sense for established business owners as well as budding entrepreneurs.

Considering property, income and sales tax laws, as well as additional factors such as carryback and carryforward allowances, Montana has ranked consistently in the top ten best state tax climates.

An infographic produced by The Tax Foundation shows an outline of the continental United States and the national business tax climate ranking within each state on the map, best in blue.

No Sales Tax

There is no sales tax in Montana, making it easier to purchase the equipment and supplies you need to get your business up and running as soon as possible.

No Inventory Tax

Once you have purchased the necessary machinery for your business (tax-free of course), your inventory will not be taxed in any way by the state of Montana.

Corporate License Tax

According to the Butte Local Development Corporation (BLDC), “Montana ranks third for mature corporate headquarters with a tax burden nearly 40% below the national average.” With a relatively low corporate tax rate of 6.75%, the Montana Department of Revenue ensures that current corporate entities flourish and new corporate entities find success.

Tax Incentives

The state of Montana offers many tax incentives for those looking to start new businesses, especially businesses that value environmental sustainability. Montana is a state known for its beautiful and wild landscapes, and businesses that protect the natural state of their operational surroundings tend to be supported in Montana with greater intensity. In terms of specific tax incentives, businesses that operate using the following systems or policies often enjoy fewer taxes, according to the BLDC:

    • Alternative Energy Production
    • Biodiesel/Bio-lubricant Production Facilities
    • Biodiesel Blending and Storage
    • Capital Gains and Dividends from Small Business Investment Company
    • Contractors’ Gross Receipts
    • Empowerment Zone
    • Corporate Energy Conservation Investments
    • Film Employment Production and Film Qualified Expenditures
    • Geothermal Systems
    • Historic Building Preservation
    • Research and Development Activities
    • Infrastructure User Fees
    • Mineral and Coal Exploration
    • New and/or Expanded Manufacturing Industry
    • Oil Seed Crushing Facility
    • Recycling
  • Research and Development Firms Tax Exemption

By taking advantage of these tax incentives, entrepreneurs in Butte have been able to curb start-up costs and get their businesses running smoothly and successfully as quickly as possible. For more information about tax incentives, visit the Montana Department of Revenue website.

An aerial view of three colleagues working at a large, light brown wooden desk together in an office.

What Sets Butte Apart

Most tax climate evaluations happen at a state level, but there are several factors that set Butte apart as a pro-business city. One, for example, has to do with Tax Increment Financing; under Montana state law, local governments are able to use property taxes to supplement infrastructure costs for new and expanding businesses within established local districts, known as Tax Increment Districts. Butte has three Tax Increment Districts, including one within the Montana Connections Business Development Park.

Additionally, there are several organizations in the Butte area that provide business planning assistance. This can mean anything from securing capital from public funding sources to real estate and relocation, and can apply to businesses both small and large.

Wrapping It Up

Because of its business-friendly tax laws and the advantages these laws provide for business owners and corporate site selectors, Butte, Montana, is undoubtedly one of the best places in the country to start a new business or settle a new corporate site. The city was built on the working class and, to this day, still appreciates and supports its local businesses.  

Given generous state laws as well as regional tax support, it seems obvious why many corporations are attracted to pioneering their businesses in Butte — the city already boasts some great examples of highly successful businesses.

Will yours be the next?

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