It’s a time-honored April tradition at the Montana Legislature that, as spring flowers begin to blossom and lawmakers barrel into the late-session time crunch, bills knocked back to the dirt sprout back to life. So it was for Gov. Greg Gianforte’s signature property tax relief proposal Friday, as lawmakers prepared to take a long weekend for their Easter holiday.
That proposal, one of the Republican governor’s key priorities, would scale down taxes on primary residences and long-term rental properties, raising them on second homes and Airbnb-style short-term rentals in an effort to limit how much tax burden is shifted onto business properties. The measure’s supporters have argued it’s a fair way to boost taxes on out-of-state property owners who don’t necessarily file Montana income taxes.
The proposal’s initial implementation bill, House Bill 231, was narrowly voted down on a 25-25 margin on the Senate floor Thursday evening after opponents raised a laundry list of concerns including opposition to raising taxes on Montana residents who own multiple properties.
Friday morning, House lawmakers resurrected the policy, amending most of HB 231’s provisions into a new bill, Senate Bill 542. Then, Friday afternoon, the Senate voted to take another swing at the original bill, with Sen. Mary Ann Dunwell, D-Helena, switching her Thursday opposition to Friday support during a reconsideration motion brought by Sen. Dave Fern, D-Whitefish.
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Senate-side lawmakers appear to be deeply skeptical of relief measures that, like the governor’s proposal, would tweak tax rates to reduce taxes on homeowners by shifting burden to other types of property. Instead, the Senate’s Republican leadership has voiced support for rebate bills that route non-property tax dollars into discounts for rising tax bills.
Property tax relief bill logjam breaks loose
After weeks of legislative gridlock, the Senate Taxation Committee has advanced amended versions of two major tax relief bills — one of them Gov. Greg Gianforte’s second home tax proposal — for debate on the Senate floor.
The House-side amendment, brought by Speaker of the House Brandon Ler, R-Savage, wiped clean the bill’s original language and added in provisions from other tax bills that have been debated this year. The shift drew bipartisan support, handily passing the House Taxation Committee.
“I do think we owe it to the state of Montana to at least try to move the ball forward and fix an ever-growing problem,” Ler said.
Two of the 21 House Taxation Committee members voted against the amendment. One of the opponents, Billings Republican Rep. Katie Zolnikov, echoed senators’ concern about extra tax burden falling on Montana residents who own multiple homes.
“If you talk to anybody in the investor world, one of the greatest ways to build wealth is through property, and I’m concerned that this potentially penalizes that,” Zolnikov said.
The House-side tax committee also put other amendments on its bill Friday. In its current form, that bill now includes the following provisions:
- A “homestead” policy that reduces tax valuations for primary residences and long-term rental properties while specifying higher valuations for non-primary residences. That provision, which would require the state Department of Revenue to begin tracking which residential properties are and aren’t primary residences, would take effect in 2026.
- A $400-per-homeowner tax rebate available this year as a stopgap measure while the state revenue department implements the homestead provision. Those rebates would be available via an application period beginning this summer.
- Revised tax valuation rates that would apply only to 2025’s property taxes, modeled on a Democratic proposal that employs a graduated rate schedule to levy more taxes on higher-value properties. A different set of graduated rates would apply to homestead-eligible properties starting in 2026.
- Rate adjustments for commercial property and agricultural land, including provisions intended to shield small business properties as tax burden is shifted off of residential taxpayers. Once the full homestead policy takes effect in 2026, homes on agricultural properties would have their tax valuations calculated the same way they do under current law regardless of ownership status.
- An opportunity for eligible property owners who fail to apply for the homestead exemption to get a refund if they successfully appeal their tax bill. The current bill text does not include a provision that had been added to the original bill providing automatic homestead qualification for properties within the boundaries of Indian reservations.
- Language intended to address a conflict with the Billings and Sunburst charters that could otherwise force those municipalities to keep their tax collections from adjusting to accommodate the bill’s rate shifts. The bill also backfills revenues for four years if the Legislature’s effort to override those municipal charters is successfully challenged in court.
The newly amended bill also includes a coordination clause that would nullify a competing property tax proposal, House Bill 528, if both bills pass.
The original version of SB 542, sponsored by Sen. Wylie Galt, R-Martinsdale, would have frozen property values for two years and passed the Senate earlier this month. Assuming the newly amended version passes a vote of the full House, the bill will head back to the Senate, potentially landing in a conference committee that could tweak the new language — or rewrite it in favor of something else.
The original second home-tax measure, which includes many of the same provisions as the cloned bill but slightly different language for handling this year’s tax bills, is now set for another Senate debate next week.
Fern, who had championed the original bill in its Thursday floor debate, said before Friday’s re-vote that he wanted to take another swing at winning the majority support it needs to pass the chamber, perhaps by introducing further amendments.
“I’m not fully aware of what’s going on and not quite of the highest pay grade to know exactly what the master plan is, so I would appreciate the opportunity to present this to you,” Fern said, adding “I’m going to get it right this time.”
As of Friday, the second-home tax bills had two major competitors:
The first is HB 528, a simpler rebalancing measure that would slash residential tax values as part of an effort to offset recent home value growth. Opponents have argued it would shift too much tax burden onto business properties. A Senate floor vote on HB 528 had been set for Friday, but was delayed until next week.
The other is Senate Bill 90, which would provide annual tax rebates instead of adjusting tax rates — an approach preferred by Senate Republican leadership but that could run afoul of the governor’s stated opposition to using the state income tax dollars for long-term property tax relief. That bill has stalled in the House tax committee, with its opponents fending off repeated motions to pull it to debate on the House floor.
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