Montana House proposes new tiered tax structure impacting Billings homeowners

The Billings City Council held a work session on April 21, 2025, to discuss significant changes to local tax structures and their implications for residents. The meeting focused on several key sections of proposed legislation that could impact property tax rates and revenue generation in the city.

The session began with a review of Section 12, which outlines that the regular entitlement share will continue to increase by a maximum of 3% annually, excluding the rebate portion. This was followed by discussions on Section 13, which introduces new rates for agricultural land, although it was noted that agricultural land constitutes a minimal part of Billings' tax base.

A major point of discussion was Section 14, which proposes a tiered rate structure for property taxes. This structure is designed to simplify tax calculations and is expected to be implemented within a year. The council noted that the Department of Revenue (DOR) had previously faced challenges with similar legislation, but the new proposal aims to streamline the process. The tiered rates will vary based on property classifications, including residential and commercial properties.

Concerns were raised regarding potential revenue losses, with estimates suggesting a loss of approximately $7 million if the new tax rates are adopted without adjustments to the mills. The council emphasized the importance of understanding these financial implications as they move forward.

Section 15 was also discussed, which establishes tax rate tiers based on the median home value in Montana. This means that as the median home value increases, the tiers will adjust accordingly, potentially stabilizing tax relief for homeowners over time. However, it was noted that if Billings does not grow at the same rate as other areas, there could be a decrease in tax revenue.

The meeting concluded with a reminder that to qualify for reduced rates, property owners must apply, similar to previous tax rebate processes. Failure to apply could result in higher tax rates for eligible homeowners. The council acknowledged the educational purpose of the session and the need for timely decisions regarding any actions to be taken before the legislation is presented to the House.

Overall, the work session highlighted the complexities of the proposed tax changes and their potential impact on the Billings community, emphasizing the need for careful consideration and public awareness as the council navigates these developments.