Vocal opposition from an array of business sector lobbyists failed to derail a pair of bills implementing Gov. Greg Gianforte’s signature property tax relief measure as they advanced Tuesday toward their final legislative votes.
The governor’s proposal, now contained in House Bill 231 and Senate Bill 542, would scale back taxes on primary residences and long-term rentals. It would avoid cuts to local government services by pushing up taxes on second homes and Airbnb-style short-term rentals — and also by passing higher tax bills onto some agricultural and business properties.
The second-home tax, developed by Rep. Llew Jones, R-Conrad, through the property tax task force Gianforte established last year, has taken a tumultuous path through the Legislature as various factions of lawmakers have pushed to derail it in favor of other approaches. Among those now-stalled alternatives are bills that would have implemented deeper residential rate cuts without differentiating between primary and second homes, thereby shifting more burden onto businesses, and measures that would have tapped non-property tax revenues in order to offer annual rebates in an effort to lower homeowner bills without raising taxes on other types of property.
The initial implementation bill for the governor’s proposal, HB 231, passed the House in February but was repeatedly voted down and revived by the state Senate in recent weeks. The other bill, SB 542, initially passed the Senate as an entirely different measure that would have frozen property values for two years before House-side lawmakers transformed it into a backup implementation bill for the second-home tax.
In part because levying higher taxes on second homes requires the state revenue department to sort out which homes are and aren’t primary residences, lawmakers have concluded it’s now too late to implement the full proposal for this fall’s property tax bills. Instead, the bills include interim rates that will shift taxes somewhat this year and a $400 rebate to tide over homeowners until the second-home tax can be implemented next year. Those rebates will be funded with $90 million from the state General Fund, which is largely fed by state income taxes.
The measures also include language intended to address a conflict with municipalities like Billings, where a provision of the city charter could keep taxes from shifting to accommodate reduced home tax values without reducing city revenues. They also tweak tax rates for agricultural properties and small commercial businesses in an effort to mitigate spillover.
Following Tuesday committee meetings where lawmakers applied final tweaks to the bills, the reworked SB 542 is now the leading measure, with the original HB 231 amended to include clauses that nullify most of its provisions if both bills pass.
That convoluted process drew criticism from some of the bill’s opponents in public comment Tuesday, some of whom suggested the sweeping rewrite of SB 542 in particular could expose the second-home tax to the risk of being thrown out if it’s challenged in court.
“(There’s) a risk I think you take, in moving this forward, in whether it meets constitutional muster,” Bob Story, the executive director of the Montana Taxpayers Association, said about SB 542.
Story and other opponents also argued against the bills on a policy basis, saying the shift would hurt Montana’s economy by raising property taxes on businesses. Some industry opponents noted that they had supported earlier drafts of the proposal, before it was amended to provide bigger tax cuts for lower-value homes — changes that will shift more taxes onto farm and business properties. Those changes had helped secure the Democratic votes the proposal’s supporters needed to advance it over opposition from hardline Republicans.
“Some of the folks that are going to see substantial increases in their property taxes are some of those industries that are already under a lot of duress — think about your coal mines, think about your hard rock mines, think about your refineries that are dealing with tariffs,” said Montana Chamber of Commerce CEO Todd O’Hair.
Other opponents who spoke at Tuesday’s hearings included the Montana Petroleum Association, Montana Farm Bureau Federation, Montana Contractors Association, Montana Association of Realtors, United Property Owners of Montana, Renewable Northwest, NorthWestern Energy, the Montana Stockgrowers and Montana-Dakota Utilities.
Jones and other lawmakers on the conference committees took issue with the notion that the property tax relief proposal will impose an unmanageable burden on the state’s largest businesses, noting that many of those businesses have had their taxes decline in recent years as residential properties pick a greater share of collections.
“Why is it that we shouldn’t pass a bill when we’ve got all these businesses that are still paying less in taxes in 2026 than they would have in 2022?” said House Majority Leader Steve Fitzpatrick, R-Great Falls.
O’Hair responded that business taxes have declined in part because their property values have declined while residential values have grown. He also argued that the state’s property tax system has been a longtime drag on economic growth.
“I would suggest you’re assuming the business community has thought that our business property taxes, commercial property taxes have been low in the past,” O’Hair said. “And it is the one complaint we hear consistently from the business community, not just in 2024, 2025, it has been a consistent message we hear from the business community: property taxes in Montana are too high and they’re too complicated.”
Earlier this week, Gianforte signed a $278-million-a-year income tax cut that he said was aimed at making Montana a more attractive destination for business investment. Lawmakers are also advancing bills offering a tax exemption on new cell towers and offering a full state property and income tax exemption aimed at luring an ammunition component factory to the state.
As Jones noted briefly later in Tuesday’s hearing, Montana’s tax climate is currently rated the fifth-most-competitive in the nation by the Tax Foundation, a right-leaning think tank — in part because there is no statewide sales tax.
In comments Tuesday, Jones did say he believes the long-term decline of Montana’s natural resource industries is putting the state’s tax system in an increasing bind.
“We are probably moving away from our ability to completely ignore a sales tax,” Jones said.
The final version of each property tax bill needs to pass preliminary and final votes in the House and Senate before advancing to the governor for his signature. The bills passed those preliminary votes in the Senate on Tuesday, HB 231 on a 28-22 margin and SB 542 on a 29-21 margin.
Editor’s note: This story was updated April 30, 2025, to correct the bill numbers in the final paragraph.
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