Overview
Montana’s primary data center incentive is a preferential property tax classification (Class 17) that taxes qualifying facilities at 0.9% of market value. The 2025 Legislature expanded Class 17 to cover on-site generation and storage but also added new restrictions, including a cost-of-production cap on selling self-generated power and an 80% onsite-use requirement. State law also protects digital asset mining (cryptocurrency) from discriminatory utility rates, shaping the operating environment for crypto-mining data centers.
Incentives
Class 17 Property Tax Classification
Montana taxes qualified data centers at 0.9% of market value instead of the higher rates that apply to other commercial property.[1]
- Facilities qualify if they meet either a 300,000 sq ft and $150M investment threshold (construction commencing after June 30, 2017) or a 25,000 sq ft and $50M investment threshold (invested within 48 months, construction commencing after January 1, 2019).[1]
- Dedicated communications infrastructure owned or leased by the data center (fiber, microwave, satellite, etc.) qualifies for Class 17 treatment for 10 years if construction commences before July 1, 2037, then reverts to Class 13 taxation.[1]
- On-site generation and storage systems located on the facility side of the meter and primarily used by the data center qualify for Class 17 for 10 years, then revert to Class 13 taxation.[1]
Application Process
The Montana Department of Revenue requires a Qualified Data Center Application for Class 17 status, submitted by March 1 of the tax year, with documentation showing the facility meets the statutory thresholds.[2]
Requirements and Conditions
Power Sales and Onsite-Use Rules
Montana’s 2025 law restricts how data centers can monetize self-generated power while qualifying for Class 17 treatment.
- If a data center sells self-generated power to a public utility or electric cooperative, the price may not exceed the cost of production, and the utility can audit operating costs annually.[1]
- On-site generation qualifies as Class 17 only if at least 80% of annual kWh are used onsite, verified with utility-grade metering; an exception applies when the governor declares an electrical generation emergency and backup power is made available to the utility.[1]
Tax Increment Financing Limitations
Class 17 property inside a tax increment financing (TIF) district must pay school equalization mills, which limits the local tax increment captured by TIF authorities.[1]
Utility and Grid Rules
Digital Asset Mining Protections
Montana law prohibits discriminatory utility rate classes for digital asset mining, defining discrimination relative to rates charged to similar industrial loads.[3] Local governments cannot impose extra requirements on digital asset mining businesses beyond those applied to data centers, cannot bar mining in industrial zones, and must allow home mining except for existing noise ordinances.[3] These rules affect the siting and operating environment for crypto-mining data centers.
What to Watch
- Public Service Commission oversight: A 2025 bill (HB 877, labeled the Montana Data Center Development Act) sought to limit PSC oversight of utility service to large customers; the debate signals ongoing tension over energy regulation and data center growth.[4]
- Further tax policy changes: The 2025 session revised Class 17 rules with HB 424; future sessions may adjust thresholds or conditions as data center activity expands.
Sources
[1] Montana Legislature, “HB 424 (2025) Enrolled Bill: Revise taxes for class seventeen data center property,” 2025, https://archive.legmt.gov/content/Sessions/69th/Contractor_index/CH0678.pdf (accessed January 8, 2026).
[2] Montana Department of Revenue, “Qualified Data Center Classification Application (V2 09/2019),” September 2019, https://revenuefiles.mt.gov/files/Forms/Qualified_Data_Center_Classification_Application.pdf (accessed January 8, 2026).
[3] Montana Legislature, “SB 178 (2023) Enrolled Bill: Generally revising cryptocurrency laws,” 2023, https://archive.legmt.gov/bills/2023/billpdf/SB0178.pdf (accessed January 8, 2026).
[4] Jordan Hansen, “Legislators propose bills to back data centers, legislate blockchain technology,” Daily Montanan, April 3, 2025, https://dailymontanan.com/2025/04/03/legislators-propose-bills-to-back-data-centers-legislate-blockchain-technology/ (accessed January 8, 2026).