Montana lawmakers examine tax strategies for second homes and family rentals

Montana lawmakers are exploring new tax strategies that could significantly impact homeowners and small businesses across the state. During a recent Senate Taxation meeting on March 18, 2025, discussions centered on potential adjustments to tax policies concerning second homes and vacation properties.

One key proposal involves allowing homeowners to rent their family vacation homes to relatives, which could provide a tax advantage for those paying Montana income tax. This strategy aims to generate local income tax revenue while addressing concerns about the 23% of taxes that currently flow out of state. However, this approach raises questions about the implications for other property classes, including owner-occupied dwellings, long-term rentals, and small businesses.

The proposed changes could lead to a reduction in tax cuts for approximately 230,000 owner-occupied homes, 30,000 long-term renters, and 35,000 small businesses. This shift in tax burden is designed to balance the financial landscape while ensuring that Montana retains more tax revenue within its borders.

As lawmakers continue to deliberate on these proposals, the outcomes could reshape the tax responsibilities of many Montanans. Stakeholders are encouraged to stay informed as the discussions progress, with potential implications for both individual taxpayers and the broader economic environment in Montana.