Senator Trevis unveils bill to flatten Montana property tax classes; fiscal note shows $1.2 billion drop in taxable value

Senator Jeremy Trevis, sponsor of Senate Bill 32, told the Senate Local Government Committee he is proposing to “lower property tax class rates” by cutting most residential rates to 1 percent and moving many nonresidential, income-producing property classes to 1.5 percent.

The bill would also raise the rate for some categories, including nonowner-occupied residential rentals (from 1.35 percent to 1.5 percent) and qualified data centers (from 0.9 percent to 1.5 percent). The measure would change how several special classes are taxed, including Class 9 (centrally assessed electric utility allocations) and Class 16 (high-voltage direct-current converter stations). The bill applies an owner-occupied test of seven months for Class 4 residential treatment. Senator Trevis said the levy and inflation-growth calculation would be reset with a new base year and that the changes would apply to property tax years beginning after Dec. 31, 2025.

Nut graf: The proposal is the most comprehensive property-tax rewrite offered so far this session, aiming to “flatten” wide disparities among Montana tax classes. Proponents argued the plan would reduce the tax burden for many homeowners and reduce utility bills where utility taxes are passed through; opponents and several committee members pressed the sponsor and fiscal staff about large estimated reductions to local taxable value and the downstream effects on local budgets and school funding.

Details and debate

Senator Trevis, a Great Falls Republican, laid out the core rate changes: residential (Class 4) taxed at 1.0 percent rather than 1.35 percent; most nonresidential, income-producing property at 1.5 percent rather than higher existing rates (he cited 1.89 percent as the statutory commercial/industrial rate tied to a 1.4 multiplier of residential); and specific increases for certain categories such as nonowner-occupied rentals and qualified data centers.

Trevis also highlighted technical changes in the bill: a seven-month owner-occupancy rule for classifying owner-occupied homes; changes to business equipment (Class A) and other equipment classes; and a shift in the statutory levy-calculation procedure (Mont. Code Ann. 15-10-420) to allow growth tied to the full year-over-year CPI-U inflation figure rather than the existing multi-year growth control measure.

The Department of Revenue prepared the fiscal estimate referenced in the hearing. Department economist Jared Isom appeared as an informational witness and told the committee he prepared the department’s calculations. Trevis and witnesses repeatedly referred to the department’s fiscal note, which the sponsor said “caught me by surprise.” The fiscal note in committee materials summarized the following impacts mentioned on the record:

- A statewide reduction in taxable value of about $1,200,000,000 from the base referenced for fiscal 2026 (a 21.6 percent decrease, per the fiscal note summary). - A large taxable-value drop in tax class 9 (electric utility allocations) of about $578,000,000, which the sponsor said should be reflected as a benefit to utility ratepayers because utilities that are monopoly providers are required to pass tax savings to customers.

Proponents and concerns

Bob Story of the Montana Taxpayers Association supported the bill as “a step in the right direction” to address disparities among tax classes, presenting charts that compared tax burdens per $100,000 of assessed value across classes. Story walked the committee through how historically residential rates were reduced over multiple reappraisals and said revenue-neutral uniform rates would be roughly 1.58 percent statewide if the residential 1 percent carveout were removed.

Gary Wiens, CEO of the Montana Electric Cooperatives Association, told the committee co-ops support the bill and said co-ops serve widely dispersed customers and view the proposal as helping keep power rates affordable for their members.

Committee questioning focused on the fiscal note, local-government revenue impacts, and how schools would be affected if mills rose to recover lost dollars at the local level. Senator Sandra (Sandra) Ellsworth and other members pressed Story and sponsor Trevis on whether homeowners would see meaningful reductions after local mill adjustments and school funding actions. Trevis and Story both said the effect would vary widely by jurisdiction depending on the local property mix and school mill responses.

Other specifics mentioned in testimony

- Class 9: The bill would tax certain centrally assessed electric utility allocations at 1.5 percent instead of 12 percent (Sponsor’s description in committee discussion). - Class 16: Defined in the bill as high-voltage direct-current converter stations that can direct power between two regional grids; the rate would move from 2.25 percent to 1.5 percent. - Owner-occupancy rule: The bill would require seven months of occupancy for a dwelling to qualify as owner-occupied for Class 4 treatment. - Fiscal timing: Applicability is specified to property tax years beginning after Dec. 31, 2025.

What’s next

Sponsor Trevis said he needs more time to “absorb” and respond to the fiscal note and indicated he may consider narrowing rate cuts or other amendments. The hearing closed without formal action; the committee will consider executive action once fiscal notes and any drafted amendments are available.

Ending: The hearing on Senate Bill 32 closed in committee; the sponsor and fiscal staff said the bill’s fiscal note and potential amendments will guide next steps.