Revenue department data indicates many homeowners are seeing lower taxes this year. More shifts will come with next year’s second-home tax.
By Eric Dietrich MONTANA FREE PRESS
As tax bills made their way to property owners across Montana this fall, anecdotal reports about the impacts of the state’s landmark 2025 tax legislation — or, at least, its initial phase — spilled into headlines: lower bills for many homeowners, higher bills for some apartment complexes and sizable increases for at least some high-end homes.
The reworked tax code was aimed at tackling years of frustration over rising residential tax bills. Given the complexity of Montana’s sprawling tax system, however, proponents, opponents and taxpayers caught in the middle had been holding their breath to see whether the measures would work as intended.
Gov. Greg Gianforte, citing data compiled by his revenue department, said earlier this month that the new tax measure — which the Republican campaigned on in concept while seeking re-election in 2024 — had resulted in tax cuts for 80% of homeowners. Other supporters, including the measure’s architect, Conrad Republican Rep. Llew Jones, have said that it’s working largely as intended: providing significant homeowner relief without shifting ruinous taxes onto farms and small business properties.
Opponents — including hardline Republicans who ended the 2025 legislative session feuding publicly with comparatively moderate colleagues who’d joined with Democrats to pass the property tax bills and other measures — are less upbeat. They continue to argue that the complex measure pushes unfair increases onto family cabins and dream homes.
The initial 2025 phase of the legislation rearranged the state’s property tax rates to impose heavier taxes on higher-value residences and deliver lighter bills to lower-value ones. A subsequent phase, a second-home tax that will further shift the burden onto residential properties that aren’t owner-occupied or offered as long-term rentals, kicks in next year.
So, what has the first phase of the seismic legislation actually done? Analysts at the Montana Department of Revenue have compiled a voluminous pile of data about the year-one effects of the legislation, passed as House Bill 231 and Senate Bill 542. That analysis, much of which was prepared at Jones’ request, was presented in part at a meeting of the Legislature’s Revenue Interim Committee Nov. 12.
Since that meeting, we’ve been combing through that data here at MTFP, working to identify its most notable takeaways. Here’s what we’ve found:
TAKEAWAY 1: Typical home tax bills are down by hundreds of dollars statewide
The department analysis looked at median-value residential properties in each of Montana’s 56 counties, estimating what their 2025 tax bills would have been with and without the new legislation. In most cases, it found that those typical savings amounted to hundreds of dollars a year.
The biggest savings were typically found in counties with the highest-value properties, places that also tend to have higher tax bills. The specifics, however, vary widely between different parts of the state depending on a variety of factors, including the composition of local tax bases and how much cities, counties and school districts collect to fund their budgets.
The department estimates, for example, that a median $685,000 residence in Gallatin County (around Bozeman) saw its 2025 tax bill reduced from $3,730 to $2,710 as a result of the legislation. That’s a savings of $1,020, or 27%.
The median $507,000 residence in Missoula County was valued lower than Gallatin County’s but paid a higher bill under the revised tax code, according to the department’s figures — $3,457. The department estimates that’s a $1,012 (or 23%) savings.
At the other end of the spectrum, typical residential tax bills in eastern Montana’s Carter County were reduced by only $157, the department estimates. That’s in part because, in a rural county where homes are worth less and most local services are paid for by taxes on oil pipelines, residential taxes are much lower than in western Montana’s urban counties — only $249 on the median residence after the 2025 legislation.
Savings in other urban counties were smaller than those in Gallatin and Missoula but still substantial, typically representing about 30% of unadjusted tax bills: $757 in Billings’ Yellowstone County, $681 in Great Falls’ Cascade County, $809 in Kalispell’s Flathead County and $807 in Helena’s Lewis and Clark County.
TAKEAWAY 2: High-value properties got higher bills
For the most part, the tax legislation operates by shifting tax burden instead of cutting into the local collections used to pay teachers and fund police departments. As a result, lower bills for homeowners with modest properties mean others have to pick up the tab — among them, people who own high-value homes.
The somewhat complex chart, prepared by revenue department analysts and annotated by MTFP in orange, illustrates how bills shifted for properties at different points on the statewide value spectrum:
The light gray bars indicate the value distribution of Montana’s 335,000 residential properties. Most of them are valued around the statewide median, $378,000, while a long tail of a few higher-value properties stretches out toward the right side of the chart, which cuts off at $2.5 million (there are, of course, residential properties in the state valued at more than that).
The black lines represent the effective tax rate — the fraction of appraised property value that has ended up subjected to taxes — at each point along the value distribution. This line is jagged because the actual math used to calculate tax bills is complex.
The dashed line indicates what effective rates for 2025 bills at different value points would have been without this year’s legislation, and the solid line indicates what the effective rates actually were. The analysis indicates that residential properties valued below about $1.7 million typically saved money as a result of this year’s tax changes, while higher-value properties paid more.
Note that these figures compare what 2025 bills would have been with and without the legislation, not how 2025 bills compare to 2024 bills. In some cases, property owners who saved money under the legislation may have seen their tax bills rise this year regardless, just not as much as the bills would have risen under the prior tax code.
A separate tally by the department estimates that, as a result of the legislation, 80% of residential properties saw their tax bills decrease versus last year, with 11% seeing increases. If legislators had left the state’s tax code unchanged, it estimates that 62% of bills would have increased and only 13% would have decreased.
TAKEAWAY 3: Some apartment buildings were hit by higher bills intended for high-end homes
Among the unintended consequences of the legislation, which was heavily amended in the final days of this year’s legislative session as proponents maneuvered it around political opposition, is a spike in tax bills this year for some multi-family apartment buildings.
Lawmakers included a provision in the interim 2025 tax rates that was intended to keep large, high-value apartment buildings from being taxed like mansions, specifying a reduced rate for multi-family properties worth more than $2 million. However, that provision wasn’t properly aligned with the rest of the legislation, where the highest 2025 rate tier for residential properties kicked in at $1.5 million. The result appears to have been unintentional tax bill boosts for some apartment owners, raising the possibility that landlords may raise rents accordingly.
An analysis by the revenue department indicates that the legislation typically raised bills for multi-family properties such as apartment complexes valued above the legislation’s $1.7 million residential break-even point. However, it generally lowered effective tax rates for comparatively modest multi-family housing such as duplexes.
As is the case with the earlier chart reflecting all residential properties, the black lines here indicate effective tax rates relative to the property’s market value. With market values surging across much of the state, a lower effective tax rate may not have produced a net decrease for a given property’s tax bill in 2025 relative to 2024.
In any case, long-term rental properties should be eligible for lower tax rates starting next year, assuming their owners qualify the property for a long-term rental exemption via an application period that opens Dec. 1.
If you’re a tenant who is facing a rent increase that your landlord attributes to rising property taxes, you can, in most cases, look up their actual tax bills — which are public records — via property tax information systems maintained by your local county.
TAKEAWAY 4: Small businesses were shielded from tax shifts
Lawmakers were also concerned that their efforts to lower homeowner taxes would spill over onto commercial properties, particularly ones owned by small businesses. As a result, they included provisions aimed at lowering taxes for less valuable commercial properties, similarly to how comparatively modest homes were treated.
The department’s analysis indicates that the commercial provisions included in the 2025 tax rates have generally had the intended effect. Commercial properties worth up to approximately $575,000 have benefited from lower effective tax rates this year, while higher-value commercial properties have paid higher rates.
TAKEAWAY 5: Agricultural land saw modest tax increases
The department also analyzed the impact of the legislation on two categories of agricultural land — grazing land and tillable non-irrigated farmland.
Residential and commercial properties are typically taxed based on the market value that the state revenue department thinks they could sell for. Agricultural land, in contrast, is taxed based on its estimated value for producing crops or livestock, a system that typically provides steep discounts to farmers and ranchers (as well as recreational properties where owners have secured agricultural designations).
The department’s analysis indicates that both categories of agricultural land it looked at saw fairly modest tax bill increases under this year’s tax legislation. The typical annual bill for 1,000 acres of grazing land increased by $39 to $618, a 6.3% increase, it concluded. The typical bill for 1,000 acres of non-irrigated tillable farmland increased $173, or 5.2%.
TAKEAWAY 6: And big increases fell on big business
The legislation’s other notable impact is boosting annual bills by millions of dollars for the state’s largest industrial companies.
NorthWestern Energy, the gas and electric utility that is Montana’s single largest taxpayer, is paying $23 million more on its power line infrastructure and $3.4 million more on its generating assets this year than it would have under the prior tax code, according to the department’s analysis.
Similarly, BNSF Railway is paying $6.7 million more on its holdings, and CHS, which operates a refinery in Laurel, is paying $1.9 million more. Also paying higher tax bills are the Express Pipeline, which transports Wyoming-bound crude oil from Canada, eastern Montana operations of natural gas company Oneok, and Phillips 66, which operates an oil refinery in Billings.
(The department’s analysis, presented as a breakdown for the state’s 10 largest taxpayers, treated divisions of some companies as separate entities. As such, these figures may exclude portions of those companies that didn’t crack the list of the state’s top-10 taxpayers by size.)
Expected tax shifts onto large industrial properties were part of the reason the tax legislation drew vocal opposition from business lobbyists. Supporters countered that many large businesses had seen their tax bills decrease in prior years — in part because the state’s skyrocketing home values had previously pulled tax burden from industrial properties onto residences.
NorthWestern, for example, saw taxes on its power lines drop by $31 million between 2022 and 2023. As a result, even with a hefty increase this year, the taxes the company pays on its transmission and distribution grid have grown by a comparatively modest $4.7 million since 2021 — an increase that represents a growth rate slower than inflation. (State utility regulations have the company treat its property tax bill as a pass-through cost when calculating customers’ electric bills.)
Note that in some situations, tax bills are also influenced by factors beyond the state’s tax policy, such as companies expanding or shrinking their holdings. BNSF, for example, has assimilated Montana Rail Link in recent years. State assessors pegged the market value of BNSF holdings at $3.0 billion in 2025, versus $2.1 billion in 2022.
