House Approves Property Tax Overhaul Amid Rising Housing Costs

HELENA, Mont. – As Montana continues to grapple with soaring home values and escalating tax bills, the state House of Representatives has passed House Bill (HB) 231, a measure aimed at providing permanent property tax relief to homeowners and small businesses. The bipartisan 68-30 vote sends the bill to the Senate, where lawmakers will weigh the proposal’s potential impact on Montana’s ongoing housing crunch.

Rising Values and Recent Rebates

Over the past several years, many homeowners have relied on property tax rebates to offset sudden spikes in home valuations fueled by high demand during the COVID-19 pandemic. As more buyers flocked to Montana, seeking greater personal freedom and relief from stricter mandates and higher tax rates in other states, housing prices increased sharply in major cities like Bozeman and Missoula, as well as in smaller communities. Rising property values led to higher tax bills, compounding the financial strain on residents who had already faced job disruptions and other economic challenges.

While state-issued rebates offered temporary relief to many Montanans, local leaders and legislators recognized the need for a long-term fix. HB 231, sponsored by Rep Llew Jones (HD 18), aims to address that problem with an overhauled tax structure that adjusts rates based on property value, granting steeper reductions for owner-occupied homes at or below the median residential value.

A Closer Look at HB 231

Montana’s current residential property tax rate is 1.35%, while commercial properties are taxed at 1.89% of their market value. These rates, combined with rising property assessments, have significantly increased tax burdens in recent years, prompting calls for long-term reform. Sponsored and advanced with bipartisan support, HB 231 proposes a tiered tax rate system for residential and commercial properties:

• 0.9% tax rate for properties valued at or below half the state’s median residential value.
• 1.1% tax rate for properties between half and 3.5 times the median value.
• 1.9% tax rate for properties at or above 3.5 times the median value.

Additionally, long-term rental properties would be taxed at 1.1%, offering relief for landlords providing stable housing options. To simplify the transition, certain property owners who previously received state rebates automatically qualify in tax years 2025 and 2026.

Estimated Savings

According to the state’s bipartisan Property Tax Task Force, the revised rates could yield a 15% average property tax reduction for homeowners and 18% reduction for small businesses. Projected beneficiaries include:

• 215,000+ primary residences
• 32,000 small businesses
• 130,000+ renters (indirectly, through stabilized rent costs)

Supporters argue that these changes will help mitigate growing cost-of-living pressures, ensuring longtime residents aren’t taxed out of their homes. At the same time, critics stress the importance of maintaining adequate funding for schools, roads, and local governments reliant on property tax revenue.

Legislative and Executive Outlook

With House passage secured, HB 231 now moves to the Senate Committee on Taxation. If approved there, it will go before the full Senate for further debate. Lawmakers in both parties have indicated a strong desire to deliver tangible relief this session, though details may still be refined before a final vote.

Governor Greg Gianforte, who has consistently advocated for property tax relief, praised the House’s action, saying the bill offers one of the best opportunities for addressing Montanans’ longstanding concerns. In a statement on February 27, he noted, “Property taxes are too high. We heard that loudly and clearly from Montanans who last year elected legislators and me to deliver substantive, long-term property tax relief this year.” Gianforte thanked House leadership for prioritizing the measure and urged swift Senate action.

Looking Ahead

If the Senate advances HB 231 with few or no amendments, the legislation will head to the governor’s desk for final approval. Observers expect robust debate around the bill’s long-term fiscal implications, including concerns about whether local governments might face revenue shortfalls in the future. Regardless, Montanans across the state will be watching closely, hopeful that the permanent reforms can alleviate the mounting pressure of property tax bills while still preserving core public services.