Montana homeowners are bracing for potential increases to their property taxes as state lawmakers grapple with property tax assessments and the effects of rising residential values. During a recent meeting of the Montana Legislative Revenue Interim Committee, officials discussed projections indicating residential property market values might surge by around 21% for the next year. This increase could result in average residential tax bills climbing by about 11%, hitting homeowners hard if legislators do not take action to adjust assessment rates.
The Montana Department of Revenue presented its preliminary estimates, laying out the stark realities for homeowners who already experienced significant tax boosts from the previous reappraisal. Back then, many saw their median property values soar by some 40%, leading to equally steep tax hikes. Lawmakers are now pressured to reassess the tax structure to avoid repeating last year’s turmoil, where many residents faced jumps in property taxes averaging 21%.
According to Department of Revenue senior economist Jared Isom, if the existing residential assessment rate remains at 1.35%, the upcoming spike would exacerbate the already hefty tax burdens borne by property taxpayers, particularly those owning single-family homes. The current framework puts residential property owners at the center of about 59% of the state’s overall property tax burden, compared to only 38% back in 1994, per data provided by the department.
One possible path suggested during committee discussions involves reducing the assessment rate from 1.35% to as low as 1.11%. This adjustment would alleviate the tax impact, theoretically reducing the average tax hike for homeowners to about 8.1% compared to maintaining the existing rate. The response to these challenges is now squarely on the shoulders of state lawmakers as they prepare for the 2025 session.
Historically speaking, Montana adheres to rolling valuations; when property values rise, property taxes are recalculated based on the new figures, which, for residential homes, translates to homeowners receiving heftier tax bills.
The debate over property taxes extends beyond mere numbers on paper; for some Montanans, these increases pose real challenges. Questions loom large about whether repealing or lowering assessment rates adequately addresses the plight of those on fixed incomes, who might struggle to meet even modest increases.
There are murmurs of alternative solutions, including the idea of introducing homestead exemptions. Such exemptions would lower property taxes on primary residences—particularly beneficial for low- and middle-income households—while raising rates on second homes and vacation rentals. Governor Greg Gianforte indicated this strategy could provide relief to homeowners, helping to offset the expected rising assessments.
Notably, the comments made by several committee members echoed this desire for change, with some advocating for shifting the tax burden back onto businesses and non-residential properties. They argue this could create more equitable taxation across the board, relieving residential homeowners from feeling as though they are shouldering the bulk of property taxes.
Yet as discussions evolve, there is recognition of the broader fiscal environment at play. Property tax revenue is anticipated to continue climbing, with some estimates projecting additional revenues of approximately $70 million without any rate adjustments made by lawmakers. Households have been squeezed, and sentiments have begun to form around how to balance those pressures with the state’s overall need for adequate funding.
Internal debates about spending cuts intersect with discussions of how property tax revenue is allocated. Some lawmakers suggest rigorous evaluations of state budgets might reveal opportunities for scaling back expenditures rather than simply shifting tax burdens. They believe this approach could stimulate creative solutions to alleviate the tax pressures faced by Montana homeowners.
With looming deadlines for legislative estimates and revenue forecasts approaching, the next steps on this issue will become clearer. The Legislative Revenue Interim Committee aims to finalize its revenue estimates by December 1, gearing up for meaningful discussions on how to craft the state’s budget for the upcoming biennium.
The outcomes of these discussions will resonate far beyond the conference room—they will impact the lives of Montanan residents directly facing challenges from increasing property taxes. With the real estate market continuing to shift and prompt value adjustments, homeowners are on high alert to see how these legislative decisions will finally play out and whether relief will genuinely come to their doorsteps next year.
Rick Bender, director of research for the Montana Budget and Policy Center, called on the committee to strongly reconsider its current methodology. He indicated the proposed tax shifts favor wealthier homeowners more significantly than addressing the needs of individuals living on set incomes. With the intention of stabilizing tax burdens for those vulnerable families, Bender recommended exploring broader adjustments to housing property classifications and exemptions.
Continuing to monitor these developments is key as Montanans prepare for the legislative session and the inevitable discussions surrounding property taxes. The outcome will shape how households respond to the realities of homeownership—the joys, the burdens, and everything in between. The residents of Montana face not only rising property values but also the very real fear of how those will translate when it’s time to pay the bills.
