Montana Legislature revises property tax rates for residential and commercial properties

The Montana Legislature convened on April 2, 2025, to introduce House Bill 528, a significant piece of legislation aimed at revising property tax classifications and rates across the state. The bill seeks to address the complexities of property taxation, particularly concerning residential and commercial properties, and proposes adjustments to the tax rates applicable to various property types.

House Bill 528 outlines specific classifications for properties, including residential, commercial, and mixed-use properties. Notably, it stipulates that properties primarily used for income generation, such as commercial buildings and golf courses, will be taxed at a rate of 1.35% of their market value. This rate is a reduction from the previous 1.4%, reflecting an effort to ease the tax burden on property owners. Additionally, the bill introduces a tiered tax structure for single-family residential dwellings, where properties valued over $1.5 million will incur a higher tax rate.

The bill also addresses the classification of mixed-use properties, stating that the land use with the highest percentage of total value will determine the property’s classification. This provision aims to simplify the appraisal process for properties that serve dual purposes, ensuring a fairer tax assessment.

Debate surrounding House Bill 528 has been notable, with proponents arguing that the changes will stimulate economic growth by making property ownership more affordable, particularly for commercial enterprises. Critics, however, express concern that the reduced tax rates may lead to decreased funding for essential public services, including education and infrastructure, as the bill also amends the tax levy for the Montana university system, maintaining a 6-mill levy for support through 2028.

The implications of House Bill 528 extend beyond immediate tax adjustments. Economically, the bill could encourage investment in commercial properties and stimulate local economies. Socially, it may impact funding for public services, raising questions about the balance between tax relief and community support.

As the legislative process continues, stakeholders from various sectors are closely monitoring the bill's progress. Experts suggest that if passed, House Bill 528 could set a precedent for future tax legislation in Montana, potentially reshaping the state's approach to property taxation and its broader economic landscape. The next steps will involve further discussions and potential amendments as the bill moves through the legislative process.