00The 2025 Montana Regular Session & 69th Legislature adjourned April 30. On May 16, Governor Gianforte announced that he signed two property tax bills (House Bill 231 and Senate Bill 542) into law, which will fundamentally revamp Montana property taxation.
The new property tax regime will be phased in during 2025 and 2026. Once fully implemented, beginning in 2026, the regime will modify rates based on whether a property is a primary residence or a long-term rental.
Most Montanans can anticipate a decrease in their property taxes. The median-level homeowner is likely to see a decrease of approximately $700 per year depending on local mill levy increases. Starting in 2026, nonresidents, second homes and short-term rentals valued at over $1.5 million will likely see an increase of approximately $8,250 per year (assuming no change in property value or mill levies). However, 2025 and 2026 property taxes will be based on a new valuation cycle updated to Jan. 1, 2024 market values which the Montana Department of Revenue (DOR) has estimated an average 20% increase in property values across the state.
In 2024, property taxes on commercial and residential properties was 1.89% with the first $1.5 million in value of single-family residences taxed at 1.35%.
Here are the critical highlights:
1. The changes begin with the 2025 property tax year, with the first installment of taxes due on Nov. 30, 2025. As a transition, a $400 rebate is being provided to each principal residence owner. This rebate will function similarly to the prior rebates (additional details below).
2. In 2025, the property tax rate will be a function of assessed value with a new <$400,000 bracket added. The first $400,000 will be taxed at .76%, the next $1.1 million will be taxed at 1.1% and everything above $1.5 million will be taxed at 2.2%. The maximum rate for multifamily dwelling units valued at more than $2 million will be 1.89%.
3. Beginning in 2026, a flat 1.9% rate will apply unless the property is either a “principal residence” or a “long-term” rental (additional detail below). For these properties, the following tiered-rate system will apply that is based on the state-wide median home value (currently estimated to be $395,000):
4. Similar changes have been made to commercial property taxation. These changes are shown in the following table:
5. Income tax brackets will also be changing significantly in 2026 as a result of House Bill 337 with the 4.7% marginal rate bracket nearly doubling the income threshold and the top marginal tax rate reducing to 5.65% from 5.9% for 2026 and reducing further to 5.4% in 2027. These changes are shown in the following table:
To learn more about updates from the Montana 2025 Legislative Session, join Parsons Behle & Latimer in partnership with the Missoula Economic Partnership on Thurs., June 5, 2025, from 3:30-5:30p.m. at the Holiday Inn Downtown Missoula.
2024 Property Tax Rebate Details
Again, the Montana DOR is issuing property tax rebates for 2024 property taxes on principal residences. Property owners who owned and lived in their residence for at least seven months in 2024 can apply for a $400 property tax rebate. Note: Property owners can only claim the rebate for one residence. Properties held by entities (LLCs, corporations, etc.) do not qualify for the property tax rebate.
The Montana DOR will be sending notices to property owners by June 30. The application window will open on Aug. 15 and the deadline for all applications is Oct. 1.
2026 Homestead and Rental Property Details
In 2026, Montana is introducing a new homestead and rental property reduced property tax rate for qualifying properties. Otherwise, all other residential properties (including cabins, second homes, short-term rentals, etc.) will be subject to an increased 1.9% flat property tax rate.
Homestead Reduced Rate: Property owners who own and have resided at their principal residence for at least seven 7 months can apply for a homestead property tax reduced rate with the Montana DOR.
Property owners will need to apply to Montana DOR by March 1, 2026, to qualify for the exemptions in 2026. However, property owners who qualify and receive the 2024 Property Tax Rebate will be automatically applied for the Homestead Exemption on the same principal residence that received the rebate.
Rental Property Reduced Rate: Long-term rental property owners who rent for periods of 28 days or more for at least seven months and whose tenants use the dwelling as their residence can apply for a rental property reduced tax rate with Montana DOR. Property owners (including entity representatives) must apply by March 1, 2026, to receive the reduced tax rates in 2026.
On June 5, Parsons Behle & Latimer, in conjunction with Montana Economic Partnership, will present a legislative debrief entitled “2025 Legislative Briefing: What Montana Businesses Need to Know.” Parsons’ attorneys will address recent legislation pertaining to taxation, employment and labor, natural resources, litigation, real estate, development and more. Click here to learn more and to register for this free seminar tailored for Montana businesses.
