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If enacted, Draft Bill L.C. 74 would impose a 4% sales and use tax on the sale of tangible personal property in the State of Montana and authorize the Department of Revenue to enter into the Sales and Use Tax Agreement. Under Section 37, the department is also authorized and directed to implement the provisions of draft bill L.C. 74, designed to comply with the rules of the Agreement. If enacted this bill would take effect January 1, 2006, and would be applicable to all goods sold after December 31, 2006. Taxpayers would be eligible for refundable income tax credits in the amount of sales tax paid. Maximum refund amounts are outlined in a regressive system where the lowest income bracket is eligible for the largest refund. (L.C. 74, filed January 21, 2005)


The House Taxation Committee has tabled a bill passed by the Senate which would have enacted a 4% sales tax, among other tax credits and refunds. However, another bill was approved by the Committee which had already passed the Senate, proposing a 5% sales and use tax on accommodations and campgrounds, a 9% sales and use tax on the base rental charge for rental vehicles, personal income tax relief, and an increase in the tobacco tax. (S.B. 470, tables in House Taxation Committee, April 10, 2003; S.B. 407, concurred as amended in House Taxation Committee, April 10, 2003.)


Legislation has been proposed to enact the provisions of the Uniform Sales and Use Tax Administration Act, the product of the Streamlined Sales Tax Project. Since Montana is one of the five states that currently does not impose sales and use tax, it included in the legislation a proposal for enacting a 4% sales and use tax. One-half of the revenue from the proposed tax would provide a refundable personal income tax credit; the other half would be used to fund public education expenses. (S.B. 224, introduced January 16, 2003)



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