The Battle Over Property Taxes: Proposed Legislative Changes in 2025

There is a notable consensus among Montana’s state lawmakers that action is required to address the escalating residential property taxes, a rare bipartisan sentiment in today’s political climate. However, the specifics of tax reform—what measures will be enacted and how they will gain the necessary support from a majority of legislators—are still up for debate. This issue is at the forefront as the Montana Legislature’s 2025 session begins, with both sides of the aisle preparing to introduce bills aimed at achieving long-term tax relief for residents.

Various Legislative Proposals for Tax Adjustments

To tackle the issue of surging property taxes, Montana lawmakers are considering a variety of legislative proposals. Some of these proposals aim to restructure the state tax code to alleviate the tax burdens currently placed on residential properties by shifting them towards other types of properties, such as commercial or non-primary residences. For instance, one proposed bill suggests offering an income tax credit that would help offset the heavy load of property tax bills. Another set of measures seeks to impose stricter limits on how much local government entities—which ultimately utilize the majority of property tax revenues—can increase their budgets.

Rising Concern Over Property Taxes Due to Housing Crunch

Property taxes have increasingly become a major concern for Montana’s legislators, driven by the rapid increase in property values stemming from the state’s ongoing housing crunch. This surge has caused the tax values of residential properties, calculated based on their market value, to rise faster than those of commercial properties, thereby disproportionately impacting homeowners and renters. According to estimates from the Montana Department of Revenue, if no adjustments are made, residential taxes are expected to rise by an average of 11% next year, highlighting the urgent need for reform.

Governor’s “Homestead” Bill to Reduce Tax Burdens

Governor Greg Gianforte has thrown his support behind a prominent legislative proposal known as the “homestead” bill, developed through his property tax task force. This bill aims to reduce the tax burden on primary residences by increasing taxes on properties used as second homes and Airbnb-style short-term rentals. By differentiating between primary and non-primary residences in tax assessments, the bill seeks to provide relief predominantly to permanent residents, thereby making tax distribution more equitable.

Alternative Solutions and Upcoming Legislative Hurdles

In contrast to the governor’s proposal, Democrats in the legislature are advocating for a system that sets up a progressive tax rate. This would lower taxes on less valuable residential properties and raise them on more valuable ones, regardless of their use as primary or secondary homes. This approach, along with other Democratic initiatives like offering a property tax credit for middle- and lower-income residents, aims to provide more targeted relief and support for homeowners and renters alike. Meanwhile, various Republican proposals, such as redirecting tourism and vehicle rental taxes to fund property tax relief, are also gaining traction. Each proposal faces its own set of challenges in the legislature, with debates likely to center on the best methods to provide effective and fair tax relief to Montana’s residents.