HELENA — Shortly after the end of the Montana Legislature’s 2023 session, a significant spike in assessed property values kicked off statewide concerns about rising property taxes. Now lawmakers will have a chance to decide how they want to address the property tax issue – but they’re not the only ones with ideas.
Gov. Greg Gianforte’s major property tax proposal – initially a recommendation from a state task force – is included in House Bill 231, sponsored by Rep. Llew Jones, R-Conrad. The bill would create a new “homestead tax rate.” Montanans’ primary residences and long-term rental properties valued below a specific threshold would have their tax rate reduced from 1.35% to 1.1%, and the rate for smaller commercial properties would drop from 1.89% to 1.5%. However, for properties that don’t qualify for the homestead rate, the residential tax rate would rise to 1.9% and the commercial rate would rise to 2.1%.
Supporters of HB 231 say it would benefit Montana residents and small businesses, shifting the tax burden toward second homes, short-term rentals and larger taxpayers. During his State of the State address Monday night, Gianforte said it could reduce taxes for more than 215,000 homeowners and 32,000 businesses, and that it would provide indirect relief for renters.
Gianforte said out-of-state residents with vacation homes in Montana shouldn’t be getting property tax cuts. He warned that lobbyists would propose changes to the bill to get “carveouts for their clients.”
“If we go that route, Montanans who own and live in their home will see less relief,” he said. “I believe our focus must be on Montana homeowners, and not corporate interests.”
Gianforte called on lawmakers to pass HB 231 by mid-February, saying that would allow the Montana Department of Revenue to implement the new rates in time for 2025.
Legislative Democrats have proposed a pair of their own bills to tackle property taxes. House Bill 155, sponsored by Rep. Mark Thane, D-Missoula, would create a graduated tax rate for residential property – 0 for the first $50,000 of a property’s value, then gradually increasing, from 1% on properties up to $500,000 to 2% for those worth more than $2 million. There would also be an exemption on the first $200,000 of value on a commercial property.
House Bill 154, sponsored by Rep. Jonathan Karlen, D-Missoula, would create a property tax credit for homeowners and renters with household incomes below $150,000. Karlen had proposed a similar bill in the 2023 Legislature.
Both HB 155 and HB 154 are scheduled for their first committee hearings on Tuesday.
Democrats argue their plan is more targeted to working-class Montanans and to renters than the governor’s. Thane said his bill was structured so it would shift the tax burden away from residential and commercial property, called “Class 4” in the state’s property tax system.
“We have seen property tax burden in Class 4 increase from 50% of the full property tax burden to 59%; if we fail to act this session, it would be somewhere in the neighborhood of 65% by our projections, and that's just simply untenable,” Thane said.
There are other proposals as well. A committee held a hearing this week on Senate Bill 32, sponsored by Sen. Jeremy Trebas, R-Great Falls, which would drastically reduce the tax rate on most types of property and set new limits on property tax mill rates. Trebas told MTN he’s considering possible amendments to reduce the fiscal impact; the governor’s budget office estimated SB 32 could cost the state more than $100 million a year in revenue.
Regardless of what the Legislature does, some people feel it’s not going to be enough to really curb the growth of property taxes. One of them is Matthew Monforton, a Bozeman attorney who’s already proposing a ballot initiative for 2026 that would amend the Montana Constitution, to cap how fast assessed property values can increase.
Monforton’s proposed measure, Constitutional Initiative 129, has already cleared an initial hurdle: Attorney General Austin Knudsen’s office has ruled that it meets the legal requirements to move forward. Monforton had previously tried to get a similar measure on the 2024 ballot, but Knudsen’s office declared it violated a rule that proposed amendments must only make a single substantive change. This time around, Monforton said the language was changed to remove a cap on overall tax rates.
CI-129 would say that a primary residence’s assessed value could not increase more than 2% in a year, as long as the owner doesn’t sell it. When a home changed owners, it would be reassessed at the full market value. Knudsen’s office prepared a fiscal impact statement, estimating the measure would reduce statewide property tax revenue by $19 million in 2028 and almost $16 million in 2029.
Monforton said state and local governments have gotten used to raising additional property tax revenue based on the inflation in home values.
“Valuations have been skyrocketing, and they're going to continue to skyrocket, because people from out of state are continuing to move into Montana,” he said. “So if we can cap valuations, we're going to be able to offer real relief to Montana homeowners, which is something that the governor's proposal simply doesn't do.”
Montana Secretary of State Christi Jacobsen’s office has already prepared a petition form for CI-129, which will need to get at least 60,000 signatures from registered Montana voters in order to qualify for the ballot. However, state law says sponsors can’t begin collecting signatures until one year before the deadline to submit them – in this case, in June, well after the 2025 legislative session is scheduled to be over.
