Understanding Montana Property Taxes

Property taxes in Montana depend on three numbers, and three different groups set them. This presentation from the Department of Revenue's Tax Policy and Research office explains how the pieces fit together and what changed for residential property in 2025 and 2026.

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How Property Tax Is Calculated

Property tax is an ad valorem tax, which means it is levied in proportion to a property's value.

  • Market Value × Tax Rate = Taxable Value
  • Taxable Value × Mill Levy = Property Tax

Who Sets Each Number

  • Market value: the Department of Revenue
  • Tax rates: the Legislature
  • Mill levies: local governments and voters

How Budgets and Mills Work

State law limits how much revenue schools and local governments can collect. Taxable value does not set the budget. It sets how many mills are needed to reach the budget.

Budget ÷ Taxable Value × 1,000 = Mills

Example: A jurisdiction with a $1,000,000 budget and $10,000,000 in taxable value levies 100 mills. If taxable value doubles to $20,000,000 and the budget stays the same, it levies 50 mills.

  • Mills move opposite to taxable value. When taxable value goes up, mills go down.
  • Property taxes are zero sum. Taxes paid by one property offset the taxes of its neighbors.
  • When one class of property grows faster than others, it takes on a larger share of funding local government.
  • Residential values have long grown faster than other property classes, shifting more of the tax burden onto residential property.

What Changed in 2025 and 2026

  • The 2025 Legislature passed HB 231 and SB 542 to lower property taxes for certain residential properties.
  • 2025 was a transition year with tiered tax rates for all residential property based on value. About 80% of properties paid less tax in 2025 than in 2024.
  • Starting in 2026, the homestead structure applies. Primary residences and long-term rentals keep reduced rates. Other residential property is taxed at a higher rate.
  • Higher taxes on other residential property lower mills, which further reduces taxes on primary residences, long-term rentals, and other classes of property.