Delivering property tax reform: a bipartisan step forward

When 150 lawmakers arrived in Helena for the 2025 legislative session, a priority was shared across party lines: Meaningful, long-term property tax reform. 

After months of negotiation, stakeholder outreach and good-faith compromise, we passed legislation that marks a major step forward in delivering property tax relief to working families and retirees across Montana. The final bill isn’t exactly what either party came in with, but it reflects the common goal of making life more affordable for everyday Montanans. 

Our current tax structure: The first $1.5 million of a home’s value is taxed at a flat 1.35% rate, with 1.89% applied to value above $1.5 million. There are 16 property tax classes, and with home values skyrocketing in much of the state, homeowners are paying a growing share of property taxes compared with tax classes representing different industry sectors. 

A transition to a new tax structure  

Beginning in 2025, Montana will implement a three-tiered tax system for residential properties: 

• The first $400,000 of assessed value: taxed at 0.76% 

• The value from $400,000 to $1.5 million: taxed at 1.1% 

• The value over $1.5 million: taxed at 2.2% 

To put this into perspective, a $500,000 home currently taxed at 1.35% will see its effective rate drop to 0.83% in 2025 — a 38.5% rate reduction. It is important to note that changing rates don’t translate into that exact tax amount in savings because local taxing jurisdictions will float the mills up to reach their budget and the tax burden is distributed among classes in the county. 

Homestead rate reduction application  

Beginning Aug. 15, homeowners can apply for a $400 rebate. This application also enrolls you in the homestead rate reduction starting in 2026. You will not need to reapply in subsequent years unless you move or change how the property is used. To qualify for the rebate and homestead rate reduction, the home must be your primary residence for at least seven months per year. 

Homestead rate reduction

Starting in 2026, Montana’s new long-term structure for principal residences and long-term rentals that have submitted the application will take effect: 

• For the portion of home value between $0 and the state median home value (expected to be roughly $390,000 in 2026): taxed at 0.76% 

• The portion of value between the median and 2x median (~$780,000): taxed at 0.9% 

• The portion of value from 2x–4x the median (~$1.56 million): Taxed at 1.1% 

• The portion of value over 4x median: 1.89% 

For example, a home valued at $750,000 — currently assessed at 1.35% — will be taxed at 0.76% on the first ~$390,000 and 0.9% on the remainder. A $500,000 home will see an effective rate of 0.79% in 2026, representing a 43% reduction. 

Second homes will be taxed at 1.89% tax rate and multi-family, long-term rentals will see a reduction to a 1.1% rate.  

Rebalancing the tax burden

This bipartisan tax plan was met with strong resistance from lobbyists representing large businesses, oil and gas, mining, and other corporate interests. Why? Because under the new structure, they will pay a larger share of the overall tax burden that will bring them closer to what they paid just a few years ago, before the sharp spike in residential home values.  

This tax plan isn’t perfect. It doesn’t reflect any single party’s ideal structure or rates. But it’s a fiscally sound, meaningful reform that was achieved through good-faith compromise — something too rare in politics today. We look forward to evaluating what works and doesn’t with this new tax structure, and making the changes needed to ensure Montanans aren’t priced out of their communities.  

Democratic House Tax Committee members Reps. Jonathan Karlen, D-Missoula; Mark Thane, D-Missoula; Brian Close, D-Bozeman; Jill Cohenour, D-Helena; Pete Elverum, D-Helena; Marilyn Marler, D-Missoula; Melissa Romano, D-Helena; James Reavis, D-Billings; Jane Weber, D-Great Falls.