In Your Business . . .

Tax Incentives

Recycling Credits are Available

Alternative Fuel Business Tax Credit for Motor Vehicle Conversions

A state tax credit is available to businesses to convert motor vehicles licensed in Montana to operate on alternative fuels. The amount of tax credit allowed is as much as 50 percent of the costs of equipment and labor for the conversion of a motor vehicle. The tax credit may not exceed $500 for a vehicle with a gross weight of 10,000 pounds or less, or $1,000 for a motor vehicle with a weight over 10,000 pounds. This tax credit must be taken the year the conversion is made.

Qualifying alternative fuel systems use natural gas, liquefied petroleum gas, liquefied natural gas, hydrogen, electricity or any fuel that contains at least 20 percent vegetable oil, animal oil, or a derivative of them. Alternative fueled vehicles that operate on least 85 percent methanol, ethanol or other alcohol, ether, or combination of them are also eligible for this tax credit.

The alternative fuel tax credit is claimed on tax form AFCR.

Click here to get the Montana Department of Revenue tax forms

Energy Conservation Tax Credit for Business

Businesses are entitled to a state tax benefit for energy conservation investments in buildings in Montana. A business may claim 5 percent of its investment as a tax credit on state income tax owned, up to a maximum of $300 for commercial, industrial or agricultural buildings.

Qualifying energy conservation investments include insulation in existing or new buildings in floors, walls and ceilings in excess of established standards of construction. Other examples that also qualify for the credit are storm windows and doors, insulated exterior doors, caulking and weather-stripping, clock regulated thermostats and replacement of incandescent light fixtures with more efficient lamp types. (Please note: this applies only to permanent fixtures, not to efficient light bulbs such as compact fluorescents installed in existing fixtures)

The tax benefit must be claimed in the year the expenditure is made. To determine the amount of tax benefit, calculate the cost of materials and installation of the energy conservation investment, less the value of any public or private grants received and utility contributions, including rebates. In new constructions, only the portion of the work that surpasses any applicable state or federal construction standards may be used.

The tax credit is claimed on tax form ENRG-C.

Click here to get the Montana Department of Revenue tax forms

Recycled Products Tax Deduction for Business

Recycling Equipment:
Montana taxpayers may be eligible for certain tax breaks associated with processing and/or using recycled materials as part of their business operations. Individuals, corporations, partnerships, or small business corporations may receive a tax credit for investments in depreciable property used primarily to collect or process reclaimable material or to manufacture a product from reclaimed material. The credit for such investments varies according to the cost of the property, but ranges incrementally from 5 percent to 25 percent on investments up to $1 million. This credit terminates on December 31, 2005.

Purchasing Recycled Materials:
Businesses that purchase recycled materials as a business-related expense also can deduct 10 percent of the expense of these products from federal adjusted gross income in arriving at Montana adjusted gross income. This deduction also expires on December 31, 2005.

Glass Recycling Credit:
Businesses that use post-consumer glass in recycled materials may claim a credit against certain permitting fees assessed pursuant to the Clean Air Act of Montana. The amount of the credit is $7 for each ton of post-consumer glass used as a substitute for non-recycled materials, with a maximum allowable credit in any calendar year of $1,500 or the total amount of fees due, whichever is less. This credit expires on December 31, 2005.

The tax deduction is claimed on tax form RCYL-CT.

Click here to get the Montana Department of Revenue tax forms