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House bill would create homestead exemption and tiered residential rates to reduce bills for lower‑value properties
Summary
Representative Mark Thane told the House Taxation Committee that House Bill 155 would create a $50,000 homestead exemption and a graduated rate for class 4 residential property, plus a $200,000 exemption for class 4 commercial property, aiming to reduce property tax bills for low‑ and middle‑value properties after recent reappraisals.
Representative Mark Thane presented House Bill 155 to the House Taxation Committee, proposing a two‑part property tax reform: a homestead exemption for the first $50,000 of residential market value and a graduated tax rate for class 4 residential property, plus a $200,000 exemption for part of class 4 commercial property. The bill text shows a tiered rate schedule for residential value slices and treats certain multifamily or high‑value multifamily properties differently, the sponsor said.
Sponsor's examples and intent: Thane walked the committee through examples on a $750,000 residential home and a $750,000 class 4 commercial property. Under his example, the proposed graduated rates would lower the taxable value on the $750,000 residential property from $10,125 (current calculation) to $7,625, reducing a 500‑mill tax bill from $5,062.50 to $3,812.50. For the commercial example, a $200,000 exemption on a $750,000 assessed value would lower taxable value and reduce that 500‑mill bill from $7,087.50 to $5,197.50, Thane said. He framed the measure as a "reset and rebalance" following large assessed‑value increases in the 2023 reappraisal.
Support and opposition: Proponents included Big Sky 55 Plus (testifier Margie McDonald), which said the bill would help fixed‑income homeowners who faced historic increases in 2023. The City of Missoula testified in support, saying the proposal targets working and middle‑class taxpayers. Several opponents testified at length. Bob Storey of the Montana Taxpayers Association and Kerry Hegerberg of the Montana Chamber of Commerce both opposed the bill, saying it shifts tax burden to other property classes and will cause local mill levies to rise in many jurisdictions. Nicole Rolfe of the Montana Farm Bureau warned the shift could increase taxes on agricultural (class 3) land in counties with limited other tax bases.
Technical and administrative testimony: Bryce Kotz, bureau chief with the property assessment division (Department of Revenue), appeared informationally to answer questions about implementation. Witnesses and committee members discussed that the effect of exemptions and rate tiers will vary widely county by county based on property mix; opponents presented modeling showing many small commercial properties and homes in some rural counties could be effectively removed from tax rolls under the proposed exemptions, shifting burden to remaining taxable properties.
Key policy tradeoffs discussed: Sponsor argued the 2023 reappraisal produced a large paper gain in residential values that shifted tax burden and needs correction; opponents argued the bill could cause substantial mill increases locally and unpredictably shift taxes onto agricultural and other classes, especially in counties with limited commercial or centrally assessed value. Opponents also noted the legislature did not mitigate reappraisal before it went into effect and cautioned about repeating that error.
Next steps: Representative Thane said he is open to amendments and requested further county‑level analysis and a fiscal note; committee members asked for county‑by‑county modeling to assess local impacts. The hearing closed with the sponsor reserving the right to amend and the committee scheduling executive action at a later date.
