Corporate Property Tax Reduction for New/Expanded Generating Facilities

Summary

Montana generating plants producing one megawatt (MW) or more with an alternative renewable energy source* are eligible for the new or expanded industry property tax reduction. This incentive reduces the local mill levy during the first nine years of operation, subject to approval by the local government. If approved, the facility is taxed at 25% or 50% of its taxable value in the first five years following the issuance of the construction permit. Each year thereafter, the tax reduction decreases and the taxable value percentage is increased in equal increments until the full taxable value is attained in the tenth year. The tax reduction applies only to taxes levied for the local high schools and elementary schools and for the local government offering the reduction.

The taxable value varies, depending on the property ownership. If owned by a utility, an exempt wholesale generator or certain other electricity producers, the property is class 13 property and would otherwise be taxed at 6% of assessed value. If owned by an electric cooperative, the property is class 5 and would otherwise be taxed at 3% of assessed value. Certain electric cooperatives fall under class 7 or class 9 and property owned by those cooperatives is taxed at 8% of assessed value and 12% of assessed value, respectively.  If owned by any other business, the real property is class 4 and would otherwise be taxed at 2.47% of assessed value. Personal property is class 8 with a tax rate of up to 3% of assessed value. The assessed value of class 4 property is adjusted every six years, and the assessed value of the other classes is adjusted yearly.

*Alternative renewable energy sources include solar, wind, geothermal, biomass, fuel cells that do not require hydrocarbon fuel, small hydroelectric generators (less than 1 MW), and methane from solid waste. In 2021, H.B. 170 made this incentive available to green hydrogen facilities, pipelines, and storage systems.