House committee considers raising business equipment exemption; proponents cite relief for small contractors, opponents warn of property tax shifts

Representative Mike Vinton opened the hearing on House Bill 8 44, which would increase the exemption threshold for Class 8 business equipment and exempt items under $250 from taxation. "House Bill 8 44 builds on the progress that was made in 2021 on the business equipment tax," Vinton said, and described the measure as intended to let businesses keep more capital invested locally.

Several business groups and trade associations testified in support. Bob Story of the Montana Taxpayers Association said his organization favors eliminating the tax but supports the bill as a step; he provided committee handouts and estimated only about 955 businesses currently pay the tax at the $1,000,000 exemption level. David Smith of the Montana Contractors Association said the change would particularly help contractors buying high‑priced specialized equipment such as graders. "A road grader ... that's gonna come in at about a million dollars. So, I think this is really what this is helping is, a smaller start up, construction company," Smith said.

Other proponents included the Montana Coal Council, Montana Bankers Association (represented by counsel), the Montana Mining Association, and business representatives testifying online. Dan Brooks testified that raising the threshold would relieve compliance burdens and that entitlement share backfill provisions would ensure local entities such as tax increment financing districts are made whole.

Opponents argued the exemption history has already reduced the business equipment tax base substantially and further increases would shift property tax burdens to homeowners and potentially to school funding. Rose Bender of the Montana Budget and Policy Center gave a detailed history of prior rate and exemption reductions and said business equipment's share of property tax has fallen sharply since 2008. She warned that this bill "does not contain a reimbursement for school districts that lose taxable value, and school mills will adjust upward as a result, shifting property taxes to other classes of property including residential homeowners. Please vote no."

Committee questions addressed inflation versus equipment price increases, how many businesses would be removed from the rolls, how lost revenue would be backfilled, and when the fiscal note would be available. Sponsor Vinton said he expected appropriations to address funding and that the bill included an annual inflation adjustment; Department of Revenue staff (Bryce Kotz) was present for technical questions but the fiscal note was not yet available.

The committee did not take a final vote on House Bill 8 44 during the hearing.