Montana’s growth depends on smart investment policy

Montanans understand that building something meaningful requires time, determination, and some risk. Whether it's a family business, a new startup, or a local infrastructure project, real growth doesn't happen overnight — it is earned and requires capital, whether that be human or financial.

That’s why recent discussions in Washington about raising taxes on investments, specifically carried interest, are so concerning.

This may sound like a niche tax policy debate, but make no mistake: the implications for Montana's economy are real. Carried interest is a key component of how private investment and our entrepreneurial system works. It rewards long-term, risk-based investments in businesses, infrastructure, and innovation. The 2017 Tax Cuts and Jobs Act preserved this incentive, recognizing how essential it is for entrepreneurs and small businesses to access capital. Now, some are suggesting it should be rolled back. 

That would be a mistake, particularly for a state like Montana.

Private equity and venture capital serve as lifelines for economic growth in rural and frontier regions. Between 2020 and 2024, Montana attracted $410 million in private equity investment, supporting 161 companies statewide. These businesses — ranging from early-stage tech firms to manufacturers and healthcare providers — collectively sustain over 34,000 jobs and contribute nearly $4 billion to Montana’s GDP. That’s not trickle-down economics; that’s boots-on-the-ground development.

Our state’s business leaders, local chambers, and community organizations understand how critical this type of investment is for Montana entrepreneurs. Long-term, risk-oriented capital makes it possible for Montana businesses to grow, hire, and remain rooted in their communities. Changing the tax treatment of carried interest would complicate the ability to raise and deploy capital here, leading to fewer jobs, less innovation and slower growth.

Supporters of a tax increase often claim they’re closing a loophole, but that’s a mischaracterization. Carried interest is not a shortcut — it’s a return on investment earned only when a business grows and succeeds over time. Unlike ordinary income, which is guaranteed, carried interest reflects years of work and risk with no promise of reward. Changing how it’s taxed would disincentivize the very kind of risk that drives job creation in places like Montana.

Montana lacks the same access to capital as coastal markets. Our entrepreneurs often face uphill battles when trying to scale. That’s why smart tax policy matters. The current structure helps level the playing field by encouraging investors to take a chance on regions that are too often overlooked. Removing or weakening that incentive could shift capital away from Montana toward already saturated markets.

Rather than raising taxes on long-term investments, Congress should reject such efforts and focus on policies that promote economic prosperity. This means supporting small businesses, incentivizing innovation, and expanding opportunities in communities that are building the future from the ground up. Investment should be encouraged, not penalized.

Now is not the time to complicate matters. Small businesses across Montana are still recovering from pandemic-era disruptions. They are facing inflation, workforce shortages, and rising interest rates. If Congress raises taxes on long-term investments, it could tip the scales in the wrong direction, stalling growth just as momentum is finally building.

We should make it easier, not harder, for investors to support local businesses, emerging industries, and community development throughout Montana. That's how we create more high-quality jobs and expand economic opportunity. That's how we grow strong, resilient communities across the state — places where people want to live, work, and build a future.

The Montana Chamber of Commerce has long been a leader in promoting business-friendly policies that empower our entrepreneurs and small businesses to create economic growth across the state. The Tax Cuts and Jobs Act got this right in 2017. We urge our great Montana leaders in Washington to keep these incentives in place for Montana's economy and the many other rural states that depend on private investment to build, grow, and compete.

Let us continue to concentrate on policies that broaden opportunities, encourage innovation, and reward the long-term investments that have been essential to Montana's economic story.

Let’s protect what works. Let’s ensure that Montana continues to grow, compete, and lead.

Todd O’Hair is the president and CEO of the Montana Chamber of Commerce.