The HJ 35 Tax Study Committee, a subcommittee of the Revenue Interim Committee, continued its study of the state and local tax system in a video meeting on May 13. The three topics for the meeting were rescheduled from the cancelled March meeting: property tax, individual income tax, and corporate income tax.

The committee concluded the information collection phase of the property tax topic and asked staff to draft two bills for review and discussion at the next meeting. One bill will change the inflation factor used to determine the maximum mill levy from one-half of the rate of inflation over the previous 3 years to the full rate of inflation over the same period. The other draft is a property tax circuit breaker to provide property tax relief. Staff will present a generic bill draft of a circuit breaker and options for setting the amount of property tax relief.

Discussions of the individual income tax also resulted in requests for two bill drafts. One idea is to use individual income tax collections that exceed prior year collections plus inflation for infrastructure. The other draft will revise the way the capital gains tax credit is calculated.

The committee requested additional information on the following individual income tax and corporate income tax topics: revisions to the minimum corporate income tax, how to address the tax gap for pass-throughs, the effect in Montana of changes to net operating loss carrybacks in the CARES Act, analysis of a gross-receipts tax, and information on the amount of tip income reported on Montana income tax returns.

Committee members also identified areas of interest for the final two tax topics included in the study plan: sales tax and natural resource taxes.

Committee Website: https://www.leg.mt.gov/committees/interim/2019rvic/
Committee Staff: memoore@mt.gov or 406-444-4496