Montana

Overview

Montana taxes property through a two-step formula that is easy to misread from outside the state. The Department of Revenue first converts a property's market value into taxable value using a percentage set by class in statute; local mill levies are then applied to that taxable value. The percentages the state calls "tax rates" are therefore assessment ratios rather than effective rates, and a change in the ratio for one class shifts burden toward or away from every other class that shares the same mill levies.[1][2]

In its 2025 session the Legislature used exactly that lever. Two bills, House Bill 231 and Senate Bill 542, replaced the single residential ratio with a graduated schedule keyed to market value for tax year 2025, and from tax year 2026 added a homestead component that separates owner-occupied homes and long-term rentals from everything else.[2] The result is a use-classification system rather than a tax on land value, but one whose structure — favouring occupied housing and charging the highest residential ratio to second homes, short-term rentals and empty lots — runs in the same direction as the vacancy and non-residency levies discussed elsewhere on this wiki.

The 2026 Schedule

The Department of Revenue's published schedule for tax year 2026 sets the following ratios.[1]

Primary residences and long-term rentals (owner-occupied for seven or more months of the year, or rented to tenants for at least seven months in stays of 28 days or more), with the ratio applied bracket by bracket so that "each portion of your property's market value is taxed at the rate listed for that bracket — not the total value":

Second homes, short-term rentals and vacant residential lots: a flat 1.90% on the whole value. Multifamily long-term rentals: 1.10%. Commercial and industrial property, vacant or improved: 1.50% below $2,274,000 (six times the state's $379,000 median residential value) and 1.90% at or above it. Agricultural land that does not meet the qualification tests (160 acres or more qualifies automatically) is assessed at a flat 14.35%; qualified agricultural land at 2.05%; forest land at 0.37%. Owners had to apply for the homestead ratio between 1 December 2025 and 1 March 2026, and recipients of the state's 2025 property-tax rebate qualified automatically if the home remained their residence.[1]

The brackets are expressed as multiples of the statewide median home value, which is why the thresholds are not round numbers and will move with each reassessment cycle.

What the Reform Does and Does Not Do

Greg Gilpin, an economist at Montana State University who has published a running series on the state's property tax, describes the package as "highly redistributive, offering lower taxes to some properties and higher taxes to others" with "little to no change to total taxes paid" overall. On his reading, every homeowner sees lower state-level property tax except those with homes valued above about $3.2 million; the burden shifts away from residential property and toward agricultural and commercial property; and, because market values rose sharply through the 2023 and 2025 reappraisals, many homeowners still pay more than they did in 2022 despite the lower ratios. His worked example for a $671,800 primary residence shows the bill falling by $440, about 10%, between 2024 and 2025 even as local mills rose.[2]

Three features matter for readers of this wiki.

• It is not a split-rate or land value tax. Every ratio applies to total market value, land and buildings together. Montana has not separated the two bases, and nothing in HB 231 or SB 542 moves in that direction.
• It is a use-based differential, not a value-based one, at the top. The 1.90% ratio on second homes and short-term rentals applies from the first dollar, while a primary residence of the same value pays 0.76% on its first bracket. The design penalises non-occupancy rather than location value as such, which places it with British Columbia's speculation and vacancy tax and New York City's 2026 pied-à-terre surcharge rather than with the split-rate systems of Pennsylvania.
• Vacant residential lots are treated as second homes. Charging an empty lot the highest residential ratio raises the carrying cost of holding buildable land idle, a modest step toward the effect a land value tax produces across the board. See Speculative Vacancy.

Gilpin also notes a pending lawsuit in Butte-Silver Bow County arguing that the Department of Revenue failed to equalise taxes as required by Article VIII of the Montana Constitution, and expects it to fail because similar arguments have failed before.[2]

Historical Note

Mason Gaffney wrote about Montana in 1977 as a resource-colony case, arguing that the state's coal and land rents were being exported through leasing and tax arrangements that favoured absentee holders. That essay, on a different tax base and a different era, is summarised at Gaffney (1977): Counter-colonial Land Policy for Montana. Its concern with absentee ownership is the closest thread connecting it to the 2026 second-home differential.

See Also

• Speculative Vacancy — the behaviour the flat 1.90% ratio on vacant residential lots bears on
• British Columbia — the speculation and vacancy tax, a provincial non-occupancy levy with a similar target
• New York City's Pied-à-Terre Tax (2026) — a value-threshold surcharge on non-primary residences enacted the same year
• Pennsylvania — the US split-rate systems Montana's classification schedule is not
• Gaffney (1977): Counter-colonial Land Policy for Montana — the wiki's earlier Montana material, on resource rents
• Land Value Tax — the policy the classification schedule approaches only in its treatment of vacant lots
• Wyoming — a neighboring state that in the same period pursued repeal and exemption of residential property tax rather than Montana's reclassification approach

Sources

1. Montana Department of Revenue, "2026 Tax Information for Montana Property Owners" (Property Tax Changes hub; retrieved 2026-09-21). revenue.mt.gov — used for every ratio and threshold in the 2026 schedule, the bracket-by-bracket rule, the occupancy tests for homestead and long-term-rental status, the median-value basis of the commercial threshold, the automatic agricultural qualification at 160 acres, and the application window and automatic-qualification rule (A-claim; official primary source).
2. Greg Gilpin, "Unpacking SB 542 and HB 231 Property Tax Reforms," Part 8 of a series on property taxation in Montana, Department of Agricultural Economics and Economics, Montana State University, 6 November 2025. montana.edu — used for the bill numbers, the taxable-value-times-mills mechanics, the "highly redistributive" characterisation, the $3.2 million cut-off, the residential-to-agricultural-and-commercial shift, the comparison with 2022 bills, the $671,800 worked example, and the Butte-Silver Bow County equalisation suit (B-claim; an academic's public-facing analysis rather than a peer-reviewed study).