Energy Conservation Tax Incentives

Many home and small business energy investments are eligible for state and federal tax incentives. And some utilities offer rebates for certain energy upgrades. And of course the present is always a good time to invest in energy conservation and renewable energy.

Most incentives are in the form of tax credits. Qualifying investments must be placed in service during the year the credit is claimed.

These renewable energy projects at the federal level include 30 percent of qualified investments being eligible, with uncapped credits for federal taxes expected to continue through 2019. The credit decreases in 2020 and will eventually expire in 2021. Of course, all credits are subtracted from net taxes owed.

For the 2018 tax year, the Montana state credit remains at 25 percent of eligible investments, up to $500 per taxpayer. The Montana credit can be claimed each year that eligible improvements are completed.

These fact sheets have been prepared to offer information and resources for specific investment areas and are for those filing based on investments made in 2018.

Energy Efficiency Tax Credit Fact Sheets

For More Information on Tax Incentives

Utility Incentive Information

  • NorthWestern Energy
  • Montana-Dakota Utilities
  • Energy West
  • The DSIRE website offers a profile of utility and electric co-op information for Montana
  • Universal System Benefits (USB) Funds:
    • Most Montana utilities have long participated in and funded energy efficiency and low income energy assistance activities through their electric and natural gas rates. In the restructuring of Montana’s energy industry, it was decided that continuing such activities was important for Montanans. Therefore, the Montana Legislature established the Universal System Benefits (USB) Charge. NorthWestern Energy and Montana-Dakota Utilities are required to collect USB funds from their customers to fund eligible activities, including energy efficiency programs, low-income energy assistance, and activities to develop renewable energy resources. This regulated charge is listed as "USBC" on your billing statement. Contact your local utility to find out about financial assistance for energy conservation projects.

Federal Tax Incentives

Additional Tax Incentives

  • Alternative Fuel Business Tax Credit for Motor Vehicle Conversions
    • A state tax credit may be available to businesses that convert motor vehicles licensed in Montana to operate on alternative fuels. The amount of tax credit allowed is as much as 50 percent of the costs of equipment and labor for the conversion of a motor vehicle. The tax credit may not exceed $500 for a vehicle with a gross weight of 10,000 pounds or less, or $1,000 for a motor vehicle with a weight over 10,000 pounds. This tax credit must be taken the year the conversion is made.
    • Qualifying alternative fuel systems use natural gas, liquefied petroleum gas, liquefied natural gas, hydrogen, electricity or any fuel that contains at least 20 percent vegetable oil, animal oil, or a derivative of them. Alternative fueled vehicles that operate on least 85 percent methanol, ethanol or other alcohol, ether, or combination of these fuel types are also eligible for this tax credit. The alternative fuel tax credit is claimed on Montana form AFCR, which is available at the Montana Department of Revenue tax forms site.
  • Recycled Products Tax Deduction for Business
    • Montana taxpayers may be eligible for certain tax credits associated with processing and/or using recycled materials as part of their business operations. Individuals, corporations, partnerships, or small business corporations may receive a tax credit for investments in depreciable property used primarily to collect or process reclaimable material or to manufacture a product from reclaimed material.
    • The credit is equal to 25 percent of the first $250,000 invested in the property, 15 percent of the next $250,000 invested, and 5 prcent of the next $500,000 invested. A taxpayer is not entitled to any additional credit for property that exceeds $1 million. For further instruction on the recycle credit, and to calculate this credit, see Montana Form RECYL on the Montana Department of Revenue tax forms site.