Highlights proposal to raise tax exemption to $3 million for small businesses, farms, ranches

Helena, MT – Rounding out National Agriculture Week, Governor Greg Gianforte on March 20th, highlighted the need for additional reforms to the business equipment tax during a press conference.

“Over the last four years, our small business owners, farmers, and ranchers have felt the pinch of Joe Biden’s affordability crisis,” Gov. Gianforte said. “If we’re serious about addressing the affordability crisis, and passing conservative reforms, reducing the business equipment tax should be a top priority.”

Montana’s business equipment tax requires businesses, including family farms and ranches, to annually 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.

In his budget, Gov. Gianforte proposed to raise the tax exemption from $1 million to $3 million to permanently eliminate the tax for and additional more than 700 small businesses, farms, and ranches. The proposal is being carried in legislation, Senate Bill 322, by Senator Josh Kassmier, R-Fort Benton.

Since 2021, the governor and the Legislature have worked together to ease the burden of the business equipment tax for small businesses, family farms, and ranches.

Between 2021 and 2023, then-Rep. Kassmier sponsored bills, which the governor signed into law, that expanded the business equipment tax exemption from $100,000 to $1 million, eliminating the business equipment tax burden for more than 5,000 small businesses, farms, and ranches.

Underscoring the burden of the business equipment tax, Gov. Gianforte said, “For farmers, it’s a tax on tractors and a tax on combines. For dentists and doctors, it’s a tax on machines, and even their instruments. For restaurant owners, it’s a tax on grills, and even knives, forks, and spoons. For a carpenter, welder, plumber, or homebuilder, it’s a tax on their tools.”

The governor continued, “We should call this tax what it is, it’s a Tool Tax. It’s an annual sales tax on equipment, and it never goes away.”

Recounting his visit to Circle View Farms in Fort Benton yesterday, the governor shared what he heard from the owner, Brent Hanford, on the tax.

“He expressed his frustration, saying that he had already paid taxes on his hard-earned money—which he used to purchase farm equipment. And then, his equipment is taxed, again. It’s taxed even if it sits in his barn, or if he uses it once or twice a season,” the governor said.

He continued, “The tax takes money he would otherwise use to hire additional help or purchase new machinery to increase efficiency. Instead, he says he has to factor in that tax when he’s taking his goods to market. And just like any tax a farmer, rancher, or business owner has to pay, he has to consider passing that cost onto customers.”

Senate Bill 322 is scheduled to be heard in the Senate Taxation Committee on March 27.

A video of the press conference may be viewed here.