Montana Legislature Ponders Tax Credit for Startups

Date: January 29, 2017

In his report for the legislative week ending January 27, NFIB/Montana State Director Riley Johnson writes of lawmakers’ slow crawl through bills.

Again, it was a slow week for major bills and activity on bills important to NFIB/Montana and small-business owners across the state. In fact, there have been only 489 bills that have been introduced as of January 27 in both houses.

The 65th Montana Legislature has already passed the one-quarter mark of its 90-day limited term, with only 25 more days left until the transmittal deadline, which is the date that all bills need to be through one house and into the second house—or they are dead. It looks like it will be a busy 25 days.

The week began with hearings on two interesting bills for small-business investors and people starting a new business or purchasing a business.

Tax Credit for Startups

Rep. Jim Hamilton (D) of Bozeman, who in private life is a financial advisor, proposed House Bills 187 and 188, which were heard in the House Tax Committee, January 24.

HB 187 would allow an income tax credit for investments in startup businesses in certain fields. The tax credit would be against individual income taxes equal to 30 percent of the investment of at least $50,000 in a startup firm developing new products in certain fields or in an investment fund that makes 75 percent of its investments in such firms.

The credit would be limited to $75,000 each year, with a life time total of $750,000 in credits. The fiscal note in the bill projects a cost to the state general fund of $375,000 annually.

Capital Gains Exemptions

A second bill by Hamilton, HB 188, would exempt capital gains taxes on the sale of certain business ownership interests. This bill would exempt up to $20 million of an individual taxpayer’s capital gains as follows:

  • 50 percent of the gains from the sale of ownership interest in a business existing before July 1, 2017
  • 75 percent of the gains from the sale of ownership interest in a business established after July 1, 2017
  • 100 percent of capital gains that are reinvested in a business meeting certain conditions, with a limit of $10 million, less any amounts exempted under 1 and 2 above.

NFIB/Montana approves of both bills, but the future of HB 187 and HB 188 are in doubt because of the sizeable fiscal notes attached. As many legislators are saying in the halls of the Capitol these days, “If you don’t know how much money you have, how do you know how much money to spend?”

No vote has been taken in committee on either bill.

Workers’ Compensation

On January 25, Senate Bill 116 was heard in the Senate Business Committee. This measure would disallow workers’ compensation coverage on any employee who made false statements on applying for a job or during a post-hiring document or statement.

The false statement would have to be directly pertinent to the workers’ compensation claim. No vote has yet been taken on SB 116 by Sen. Mark Blasdel (R) of Kalispell, but indications from committee questioning made it appear amendments likely, to satisfy concerns about privacy and forms of false statements made by an employee.

On January 27, House Bill 229 was heard. It would allow employees receiving workers’ compensation benefits to select their own treating physician, rather than allowing the insurer to select the physicians or preferred provider program.

A major overhaul of the workers’ compensation law in Montana was made in 2011, resulting in a 26 percent reduction in workers’ compensation premiums for Montana small employers. Since then, the Montana State Fund has awarded some $90 million in dividends to employers over the past four years.

The selection of the physician by the insurance carrier was estimated in 2011 to be an 8.5 percent factor in the 26 percent premium reduction. NFIB/Montana strongly opposes HB 229, as workers’ compensation costs to small-business owners is a major cost factor in doing business in our state.

Rural Pharmacies

Another no-vote-on-yet bill was heard the same day in the House Business Committee. HB 276 would prohibit insurance companies from paying small and independently owned pharmacies less for filling prescriptions than the pharmacies paid to the manufacturers for the drug.

The concern was highlighted by small pharmacies in rural and small communities where revenue margins are low, causing small community pharmacies to reject filling certain prescriptions, forcing residents to go out of town to have them filled.

Representatives for some small-town pharmacies testified that the current situation could cause small pharmacies to leave rural Montana communities.

NFIB/Montana received numerous calls from rural pharmacy members to support this bill, which it did.

Coming Up

Yet to come in the days ahead are bills to:

  • raise the gasoline tax 10 cents a gallon
  • expand the current resort sales tax to any local government
  • individual income tax reforms
  • bills to fund infrastructure projects like roads and bridges statewide.

Get Involved

Getting involved in the 2017 Legislature is easy. The best way to have your voice heard quickly is to phone 406-444-4800. Operators are on hand in the Capitol Building to take messages for up to five legislators on each call, and delivery is within a half an hour.

More information on:

  • locating legislators
  • getting an e-mail address
  • viewing committee meetings and floor sessions on television or over the internet
  • review all hearings
  • reading of the actual bills …

… can go to and access everything electronically.

[Tile photo of Rep. Jim Hamilton courtesy of The Montana Legislature website.]

Previous Legislative Reports

January 20 Report—NFIB Helps Defeat Montana Minimum-Wage Bill

January 13 Report—NFIB Readies Opposition to Montana Minimum-Wage Bill

January 6 Report—Montana Legislature Opens Biennial Session


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