Montana homeowners are bracing for another round of potentially steep property tax increases as the state’s residential real estate market continues to soar. With anticipated home values set to rise by 21% next year, the prospects appear grim for many residents who are already grappling with the financial fallout from past tax hikes.
The scenario isn't new for Montanans. During the 2023 legislative session, lawmakers failed to lower assessment rates, resulting in homeowners facing an average tax bill increase of 21%. The Montana Department of Revenue reported this alarming trend during the recent Legislative Revenue Interim Committee meeting, warning legislators they might be faced with similar burdens if they do not take action to adjust the residential assessment rate.
Currently, residential properties are assessed at 1.35% of their market value. If this figure remains unchanged for the 2025 fiscal year, the Department of Revenue estimates the average residential tax bill could rise approximately 11% compared to the previous year. This upward trend is contrasted sharply by projections from commercial and agricultural properties, which might see their tax rates either fall or remain stagnant.
Jared Isom, the department's senior economist, provided insights during the meeting, stating, "The projected increase to residential values may be higher than some were expecting." The previous reappraisal resulted in the median residential property tax bill jumping significantly, leading many homeowners to voice their frustrations and call for legislative measures to aid those impacted by swiftly increasing property values.
Residential property taxpayers are currently carrying the heaviest burden, now accounting for about 59% of the state’s overall property tax load, whereas back in 1994, residential homeowners were responsible for only 38% of it. These figures serve to underline the growing financial pressures on regular Montanans, who are seeing their home values appreciate rapidly.
The Legislative Revenue Interim Committee has recognized the need to explore options to mitigate the impact of rising home assessments. A possible solution on the table is reducing the residential assessment rate to 1.11%. This adjustment, according to preliminary estimates from the Department of Revenue, would yield about 8.1% less tax burden for homeowners compared to maintaining the current rate of 1.35%.
But the committee's discussions also highlighted some complexity. If lawmakers decide to introduce revenue-neutral rates for other property classes, including commercial and agricultural land, it could lead to slight tax increases for these property owners—something they might not welcomed.
With the 2025 legislative session on the horizon, the committee's vice chairperson, Rep. Mark Thane from Missoula, raised the question of what rate adjustments could effectively counterbalance what he termed “permanent property tax increases” created by past legislative decisions. Public stakeholders are echoing calls for more transparent scrutiny of how tax rates are determined and how they can be adjusted without disproportionately affecting one segment of the population over another.
Interestingly, some lawmakers have floated alternative strategies to the tax assessment rate revisions proposed by the governor's Property Tax Task Force. Proposals include creating different tax rates for homes based on their value, aiming to provide relief to would-be challengers of the property tax system.
Overall, as the struggles of Montana homeowners ripple across the state, discussions about how to address these rising taxes remain contentious. The tension between ensuring adequate state revenue and providing financial relief to residents continues to play out as lawmakers prepare to tackle the complex web of property tax assessments.
The committee must finalize their revenue estimates by December 1st, setting the stage for the debates and decisions to come during the 2025 legislative session. What remains evident is the urgency for legislative action geared toward easing the burden on Montanans facing the realities of high housing values and rising property taxes.
With division among lawmakers on how best to address these rising costs, it remains to be seen whether they can strike the right balance between maintaining necessary tax revenues and delivering much-needed relief to beleaguered homeowners. Whatever direction they take, the stakes are high as many Montanans hope for supportive measures amid the looming tax increases.
