Revise property tax rates for certain property

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AN ACT GENERALLY REVISING PROPERTY TAX LAWS; PROVIDING FOR A PROPERTY TAX REBATE
ON A PRINCIPAL RESIDENCE BASED ON A CERTAIN AMOUNT OF PROPERTY TAXES PAID FOR TAX
YEAR 2024; TEMPORARILY REDUCING CLASS FOUR RESIDENTIAL PROPERTY TAX RATES; REVISING
TAX RATES FOR CERTAIN CLASS FOUR RESIDENTIAL AND COMMERCIAL PROPERTY; PROVIDING A
LOWER TAX RATE FOR CERTAIN OWNER-OCCUPIED RESIDENTIAL PROPERTY AND LONG-TERM
RENTALS; PROVIDING A LOWER TAX RATE FOR A PORTION OF COMMERCIAL PROPERTY VALUE;
PROVIDING ELIGIBILITY AND APPLICATION REQUIREMENTS; PROVIDING FOR AN APPEAL PROCESS;
PROVIDING FOR THE ADJUSTMENT OF CERTAIN LOCAL GOVERNMENT FIXED MILL LEVIES;
PROVIDING APPROPRIATIONS; PROVIDING DEFINITIONS; PROVIDING RULEMAKING AUTHORITY;
AMENDING SECTIONS 15-1-121, 15-6-134, 15-7-102, 15-15-101, 15-15-102, 15-15-103, 15-16-101, 15-17-
125, AND 15-30-2120, MCA; AND PROVIDING EFFECTIVE DATES, APPLICABILITY DATES, AND
TERMINATION DATES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Definitions. As used in [sections 1 through 6] and 15-6-134, the following definitions
apply:
(1) "Homestead reduced tax rate" means the tax rate provided for in 15-6-134(3)(b)(i).
(2) "Long-term rental" means class four residential property:
(a) that is a single-family dwelling unit, unit of a multiple-unit dwelling, trailer, manufactured home,
or mobile home and the parcel on which the long-term rental improvements are located but not including any
contiguous or adjacent parcels;
(b) that an owner can demonstrate was:
(i) rented for periods of 28 days or more for at least 7 months in each tax year for which the rental
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property reduced tax rate is claimed; or
(ii) vacant for not more than 5 months to complete documented property repairs;
(c) that is occupied by tenants who use the dwelling as a residence during the year in which the
reduced tax rate is claimed; and
(d) for which the owner is current on payment of the assessed Montana property taxes when
claiming the reduced tax rate.
(3) "Owner" includes a purchaser under contract for deed as defined in 70-20-115, a grantor of a
trust indenture as defined in 71-1-303, and the trustee of a grantor trust that is revocable as defined in 72-38-
103.
(4) (a) "Principal residence" means class four residential property:
(i) that is a single-family dwelling unit, unit of a multiple-unit dwelling, trailer, manufactured home,
or mobile home and the parcel on which the principal residence improvements are located but not including any
contiguous or adjacent parcels;
(ii) in which an owner can demonstrate the owner owned and lived for at least 7 months of the
year for which the homestead reduced tax rate for a principal residence is claimed;
(iii) that is the only residence for which the owner claims the homestead reduced tax rate for that
year; and
(iv) for which the owner made payment of the assessed Montana property taxes.
(b) An owner who cannot meet the requirements of subsection (4)(a)(ii) because the owner’s
principal residence changed during the tax year to another principal residence may still qualify for the
homestead reduced tax rate if the owner paid the Montana property taxes while residing in each principal
residence for a total of at least 7 consecutive months for each tax year.
(5) "Rental property reduced tax rate" means the tax rate provided for in 15-6-134(3)(b).
(6) "Tax year 2026" means the period from January 1, 2026, through December 31, 2026.
Section 2. Homestead reduced tax rate -- application -- limitations. (1) There is a homestead
reduced tax rate provided for in 15-6-134(3)(b)(i) for a principal residence as provided in this section.
(2) (a) Beginning in tax year 2026, the owner of a principal residence may apply to the department
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to receive the homestead reduced tax rate. The owner of a principal residence who applied for and received the
rebate provided for in [sections 9 through 11] for tax year 2024 automatically qualifies for the homestead
reduced tax rate unless subsections (2)(c)(i) through (2)(c)(iii) apply to the principal residence for which the
rebate was claimed. The owner of a principal residence who did not receive a rebate under [sections 9 through
11], shall apply as provided in this section to receive the homestead reduced tax rate in tax year 2026.
(b) To receive the homestead reduced tax rate for the tax year in which the application is first
made, the owner shall apply electronically through the department's website or by mail on a form prescribed by
the department between December 1 of the immediately preceding year and March 1. Applications submitted
by mail must be postmarked by March 1. Approved applications received electronically or postmarked after
March 1 apply to the following tax year.
(c) Once approved, the homestead reduced tax rate remains effective until the end of the tax year
in which any of the following events occur:
(i) there is a change in ownership of the property;
(ii) the owner no longer uses the dwelling as a principal residence; or
(iii) the owner applies for a homestead reduced tax rate for a different principal residence.
(d) If a homestead reduced tax rate is terminated pursuant to subsection (2)(c) or [section 4], any
remaining property taxes due for the year in which the homestead reduced tax rate is terminated must be
based on the tax rate in effect on January 1 of the year in which the homestead reduced tax rate was
terminated.
(e) An application for a homestead reduced tax rate must be submitted on a form prescribed by the
department and must contain:
(i) a written declaration made under penalty of perjury that the applicant owns and maintains the
land and improvements as the principal residence as defined in [section 1]. The application must state the
penalty provided for in [section 4].
(ii) the geocode or other property identifier of the principal residence for which the applicant is
requesting the homestead reduced tax rate;
(iii) the social security number of the applicant; and
(iv) any other information required by the department that is relevant to the applicant’s eligibility.
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(3) (a) Except as provided in subsection (3)(b), class four residential property owned by an entity is
not eligible to receive the homestead reduced tax rate.
(b) The trustee of a grantor revocable trust may apply for a homestead reduced tax rate for a
principal residence on behalf of the trust if the dwelling meets the definition of a principal residence for the
grantor.
(c) Class four residential property located on fee land within the exterior boundaries of an Indian
reservation within this state is automatically eligible for the homestead reduced tax rate provided for in this
section and is not required to submit an application pursuant to subsection (2).
(4) The department shall notify the owner if the homestead reduced tax rate is applied to the
property or if the application was denied.
Section 3. Rental property reduced tax rate -- application -- limitations. (1) There is a rental
property reduced tax rate provided for in 15-6-134(3)(b) for a long-term rental as provided in this section.
(2) (a) Beginning in tax year 2026, the owner of a long-term rental may apply to the department to
receive the rental property reduced tax rate. The application must be made by an individual owner or, for an
entity owner, by an authorized representative of the entity.
(b) The department shall mail a notice to potential claimants by October 30, 2025, for tax year
2026. Receipt of a notice does not establish that a taxpayer or property owner is eligible to receive the rental
property reduced tax rate, and a taxpayer who does not receive a notice may still be eligible to claim the rental
property reduced tax rate. All taxpayers, regardless of the receipt of notice, shall apply for a reduced rate as
provided in this subsection (2).
(c) To receive the rental property reduced tax rate for the tax year in which the application is first
made, the owner or authorized representative shall apply electronically or by mail on a form prescribed by the
department between December 1 of the immediately preceding year and March 1. Applications received
electronically or postmarked after March 1 apply to the following tax year.
(d) Once approved, the rental property reduced tax rate remains effective until the end of the tax
year in which any of the following events occur:
(i) there is a change in ownership of the property;
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(ii) the property is no longer rented to tenants as a dwelling;
(iii) the terms of the lease change and the property no longer qualifies as a long-term rental as
defined in [section 1]; or
(iv) the owner fails to submit a complete reapplication to the department as required in subsection
(4).
(d)(e) If a rental property reduced tax rate is terminated pursuant to subsection (2)(d) or [section 4],
any remaining property taxes due for the year in which the rental property reduced tax rate is terminated must
be based on the tax rate in effect on January 1 of the year in which the rental property reduced tax rate was
terminated.
(3) An application for a rental property reduced tax rate must be submitted on a form prescribed by
the department and must contain:
(a) a written declaration made under penalty of perjury that the applicant owns and maintains the
land and improvements as a long-term rental as defined in [section 1]. The application must state the penalty
provided for in [section 4].
(b) the geocode or other property identifier for the long-term rental for which the applicant is
requesting the rental property reduced tax rate;
(c) the social security number or taxpayer identification number of the applicant;
(d) the income and expense information for the long-term rental for the immediately preceding
year, including the amount of rent charged each month; and
(e) any other information required by the department that is relevant to the applicant’s eligibility.
(4) To continue receiving the rental property reduced tax rate, the owner of a qualifying long-term
rental shall reapply as required by the department. Beginning in 2028, the department shall require
reapplication of 20% of long-term rentals each year.
(5) Periods of short-term vacancy not exceeding 3 5 months in a 12-month period do not disqualify
a long-term rental from receiving the rental property reduced tax rate.
(6) The department shall notify the owner if the rental property reduced tax rate is applied to the
property or if the application was denied.
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Section 4. Homestead and rental property reduced tax rates -- improper approval -- penalty for
false or fraudulent application. (1) Except as provided in subsection (2), if the department determines that an
application for a homestead reduced tax rate or a rental property reduced tax rate was improperly approved or
that the property no longer qualifies for the reduced rate, the department shall revise the assessment for each
year the homestead reduced tax rate or the rental property reduced tax rate was improperly granted subject to
the assessment revision procedure established in 15-8-601.
(2) (a) A person who files a false or fraudulent application for a homestead reduced tax rate
provided for in [section 2 or 3] or for a rental property reduced tax rate provided for in [section 4 3] is subject to
criminal prosecution under the provisions of 45-7-202.
(3) (a) If a person is determined to have filed a false or fraudulent application, the department shall
revise the assessment of the property subject to the assessment revision procedure established in this section
and 15-8-601 and assess a penalty as provided in this subsection (3). The penalty is equal to three times the
base penalty amount calculated under subsection (3)(b) plus interest at the rate provided in 15-16-102
calculated from the original due date of the taxes, until paid.
(b) The base penalty amount is equal to the property tax due for each year the homestead
reduced tax rate or the rental property reduced tax rate was improperly received, determined using the tax rate
provided for in 15-6-134(3)(a), the appraised value, and the mill levies in effect for the year, less the actual
property taxes paid in the year.
(c) The revised assessment and penalty must be assessed against a person who filed a false or
fraudulent application even if the person no longer owns the property.
(4) If the person who filed a false or fraudulent application no longer owns the property associated
with the false or fraudulent application, the penalty plus interest provided for in subsection (3) may be recovered
as any other tax owed the state. If the penalty plus interest becomes due and owing, the department may issue
a warrant for distraint as provided in Title 15, chapter 1, part 7.
(5) Except as provided in subsection (4), if the department determines that a false or fraudulent
application was made, the department shall send the revised assessment with the additional penalty amount as
determined under subsection (3) to the county treasurer in the county where the property is located.
(6) The county treasurer shall distribute property taxes, penalty, and interest collected under this
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section proportionally to the affected taxing jurisdictions.
(7) A revised assessment made under this section must be made within 10 years after the end of
the calendar year in which the original application was made.
Section 5. Appeal of denial of reduced tax rate. (1) (a) If the department denies an application for a
homestead reduced tax rate or a rental property reduced tax rate, the owner may request an informal review of
the denial by submitting an objection on written or electronic forms provided by the department for that purpose
in a manner prescribed by the department. The objection must be made no later than 30 days after the date of
the denial notification sent pursuant to [section 2 (4) or 3(6)].
(b) The property owner may request that the department consider extenuating circumstances to
grant an application for the homestead reduced tax rate or the rental property reduced tax rate. Extenuating
circumstances include but are not limited to extraordinary, unusual, or infrequent events that are material in
nature and of a character different from the typical or customary, and that are not expected to recur.
(c) After the informal review, the department shall determine the correct status of the homestead
reduced tax rate or the rental property reduced tax rate and notify the taxpayer of its determination by mail or
electronically. In the notification, the department shall state its reasons for accepting or denying the application.
(2) If a property owner is aggrieved by the determination made by the department after the review
provided for in subsection (1), the property owner has the right to first appeal to the county tax appeal board
and then to the Montana tax appeal board, whose findings are final subject to the right of review in the courts.
An appeal to the county tax appeal board, pursuant to 15-15-102, must be filed within 30 days from the date on
the notice of the department's determination. If the county tax appeal board or the Montana tax appeal board
determines that the homestead reduced tax rate or the rental property reduced tax rate should apply, the
department shall adjust the taxable value of the property in accordance with the board's order.
Section 6. Rulemaking authority. The department shall adopt rules that are necessary to implement
and administer [sections 1 through 6].
Section 7. Legislative findings -- local government charters and fixed mill levy limits
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superseded -- definition. (1) (a) The legislature finds that most local governments set mill levies that adjust
downward when taxable value increases under 15-10-420. This floating mill levy concept automatically lowers
the number of mills levied against a taxpayer when property values increase, which mitigates increases in
property values. However, when mill levies are fixed, the opposite occurs when property values increase, and
property taxes are not automatically mitigated for taxpayers that are levied based on a fixed mill levy.
(b) The legislature finds further that it is prohibited under Article VIII, section 2, of the Montana
constitution, from suspending or contracting away the power to tax. The legislature also recognizes and
respects the power of local governments under Article XI, section 5, of the Montana constitution to adopt,
amend, revise, or abandon a charter.
(2) As a matter of policy, the legislature intends to supersede local government charters that fix mill
levy limits for the limited purpose of exercising the power to tax while also maintaining local government
revenue sources without raising taxes on residential taxpayers. Having considered all options on a statewide
basis, the legislature finds the statutory structure of the property tax has evolved significantly since the passage
of Initiative Measure No. 105 on November 4, 1986, and the enactment of 15-10-420 by the legislature in 1999.
Given the significant change in the structure of the property tax and the rising cost of residential property in the
last 5 years, there is a compelling interest to all the citizens of the state to lower residential property tax rates
for primary residences, which can only be accomplished by this section and 15-10-420.
(3) A local government with a charter form of government that includes a mill levy limit of a specific
number of mills that may be imposed in the charter shall levy the number of mills in fiscal year 2026 and
subsequent tax years that will generate the amount of property taxes assessed in fiscal year 2025, without
amending or revising the charter. In fiscal years after 2026, the local government shall levy the number of mills
levied in fiscal year 2026.
(4) A taxing entity with a local mill levy limit of a specific number of mills that may be imposed for
public safety that was authorized by the voters before [the effective date of this section] may:
(a) elect to transition a voted mill public safety levy to a dollar-based mill levy equal to the amount
of property taxes assessed in fiscal year 2025 and thereafter subject to the provisions of 15-10-420(1)(a); or
(b) levy the number of mills in fiscal year 2026 that will generate the amount of property taxes
assessed in fiscal year 2025. In fiscal years after 2026, the local government shall levy the number of mills
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levied in fiscal year 2026.
(5) As used in this section, "public safety" means police, fire, and emergency medical services.
Section 8. Reimbursement for loss of revenue from certain fixed mill levies -- definition. (1) The
department shall reimburse each taxing entity as provided in this section for the revenue loss resulting from the
tax rate reductions in 15-6-134 as amended by [this act] for the following levies:
(a) levies of a local government with a charter form of government that includes a mill levy limit of a
specific number of mills that may be imposed in the charter; and
(b) levies stated as a specific mill levy authorized by voters for public safety before [the effective
date of this act].
(2) (a) For fiscal year 2026, the reimbursement must be equal to the difference between the
property tax revenue collected from the levies provided for in subsection (1) and the property tax revenue
collected in fiscal year 2025. After fiscal year 2026, the reimbursement must be equal to the difference between
the property tax revenue collected from the levies provided for in subsection (1) and the property tax revenue
that would be collected in the current fiscal year using the mill levy that would raise the fiscal year 2025 tax
revenue using the fiscal year 2026 taxable value.
(b) A reimbursement pursuant to this section must include any fines, penalties, or damages
resulting from a judgment levy against the taxing entity in levying property taxes in accordance with [section 7].
(3) A taxing entity eligible to receive a reimbursement under this section shall report the loss in
revenue from the tax rate reductions in 15-6-134 as amended by [this act] and any amount reimbursable under
subsection (2)(b) to the department of revenue.
(4) A reimbursement provided for in this section may only be made for 4 years after [the effective
date of this section].
(5) The department shall distribute the reimbursements with the entitlement share payments under
15-1-121(7).
(6) As used in this section, "public safety" means police, fire, and emergency medical services.
Section 9. Definitions. As used in [sections 9 through 11], the following definitions apply:
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(1) "Montana property taxes" means the ad valorem property taxes, special assessments, and
other fees imposed on property classified under 15-6-134 that is a single-family dwelling unit, unit of a multiple-
unit dwelling, trailer, manufactured home, or mobile home and as much of the surrounding land, not exceeding
1 acre, as is reasonably necessary for its use as a dwelling and that were assessed and paid by the taxpayer
for tax year 2024. The amount of Montana property taxes assessed and paid is equal to the total amount billed
by the local government for the dwelling as shown on the 2024 property tax bill received by the taxpayer with a
first-half payment due in or around November 2024 and a second-half payment due in or around May 2025.
(2) "Owned" includes purchasing under a contract for deed and being the grantor or grantors under
a revocable trust indenture.
(3) (a) "Principal residence" means, subject to the provisions of subsection (3)(b), a dwelling:
(i) in which an owner can demonstrate the owner owned and lived for at least 7 months of the
year for which the property tax rebate is claimed;
(ii) that is the only residence for which the taxpayer claims the property tax rebate; and
(iii) for which the taxpayer made payment of the assessed Montana property taxes during tax year
2024.
(b) A taxpayer who cannot meet the requirements of subsection (3)(a)(i) because the owner’s
principal residence changed during the tax year to another principal residence may still claim the property tax
rebate if the taxpayer paid the Montana property taxes while residing in each principal residence for a total of at
least 7 consecutive months for the 2024 tax year.
(4) "Tax year 2024" means the period January 1, 2024, through December 31, 2024.
Section 10. Property tax rebate -- manner of claiming -- limitations -- appeals. (1) Subject to the
conditions provided for in [sections 9 through 11], there is a rebate of Montana property taxes in the amount of
$400 or the amount of total property taxes paid, whichever is less, for tax year 2024.
(2) The rebate provided for in subsection (1) is for Montana property taxes assessed to and paid
by a taxpayer or taxpayers on property they owned and occupied as a principal residence during tax year 2024.
(3) The department shall mail a notice to potential claimants by June 30, 2025, for tax year 2024.
Receipt of a notice does not establish that a taxpayer or property owner is eligible for a rebate, and a taxpayer
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who does not receive a notice may still be eligible to claim a rebate. All taxpayers, regardless of the receipt of
notice, shall claim a rebate as provided in subsection (5).
(4) Except as provided in subsections (5)(c) and (5)(d), a single-family dwelling unit, unit of a
multiple-unit dwelling, trailer, manufactured home, or mobile home and as much of the surrounding land, not
exceeding 1 acre that is owned by an entity is not eligible to claim the rebate.
(5) (a) (i) All claims for this property tax rebate must be submitted to the department electronically
or by mail.
(ii) Electronic claims must be submitted between August 15, 2025, and October 1, 2025, through
the department's website.
(iii) Claims submitted by mail must be made on a form prescribed by the department and
postmarked by October 1.
(iv) The department may grant an extension of time if the claimant establishes good cause for
missing the October 1 deadline. The department's authority to consider an application terminates on December
1, 2025, and any applications or requests for extension received after that date may not be processed.
(b) Subject to subsections (5)(c) and (5)(d), a claim for rebate must be submitted, under penalty of
false swearing and the penalties provided in [section 11], on a form prescribed by the department and must
contain:
(i) an affirmation that the claimant owns and maintains the land and improvements as the principal
residence as defined in [section 9];
(ii) the geocode or other property identifier for the principal residence that the claimant is
requesting the rebate on;
(iii) the social security number of the claimant and the claimant's spouse; and
(iv) any other information as required by the department that is relevant to the claimant's eligibility.
(c) The personal representative of the estate of a deceased taxpayer may execute and file the
claim for rebate on behalf of a deceased taxpayer who qualifies for the rebate.
(d) The trustee of a grantor revocable trust may file a claim on behalf of the trust if the dwelling
meets the definition of a principal residence for the grantor.
(6) Only one rebate will be issued to a taxpayer for the Montana property taxes paid by the
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taxpayer for tax year 2024.
(7) If a debt is due and owing to the state, the department may offset the rebate in this section as
provided in sections 15-30-2629, 15-30-2630, 17-4-105, or as otherwise provided by law.
(8) If a property tax rebate is denied by the department, the claimant is entitled to a written
explanation why the application was denied. A claimant may make a written appeal of a denial to a
management level employee of the department, who shall issue a final decision that is not appealable. Appeals
occurring under this subsection (8) are not subject to the provisions contained in 15-1-211.
Section 11. Property tax rebate -- penalty for false or fraudulent claim. (1) Except as provided in
subsection (2), if the department discovers that a rebate paid to a taxpayer exceeded the amount allowed by
[sections 9 through 11], the department may, within 1 year from the date the rebate was transmitted to the
taxpayer, assess the taxpayer for the difference. The assessment is subject to the uniform dispute review
procedure established in 15-1-211.
(2) A person who files a false or fraudulent claim for a property tax rebate under [sections 9
through 11] is subject to criminal prosecution under the provisions of 45-7-202. If a false or fraudulent claim has
been paid by the department, the amount paid may be recovered as any other tax owed the state, together with
a penalty of 300% of the rebate claimed and interest on the amount of the rebate claimed plus penalty at the
rate of 12% a year, until paid. If this rebate plus penalty becomes due and owing, the department may issue a
warrant for distraint as provided in Title 15, chapter 1, part 7.
Section 12. Section 15-1-121, MCA, is amended to read:
"15-1-121. Entitlement share payment -- purpose -- appropriation. (1) As described in 15-1-
120(3), each local government is entitled to an annual amount that is the replacement for revenue received by
local governments for diminishment of property tax base and various earmarked fees and other revenue that,
pursuant to Chapter 574, Laws of 2001, amended by section 4, Chapter 13, Special Laws of August 2002, and
later enactments, were consolidated to provide aggregation of certain reimbursements, fees, tax collections,
and other revenue in the state treasury with each local government's share. The reimbursement under this
section is provided by direct payment from the state treasury rather than the ad hoc system that offset certain
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state payments with local government collections due the state and reimbursements made by percentage splits,
with a local government remitting a portion of collections to the state, retaining a portion, and in some cases
sending a portion to other local governments.
(2) The sources of dedicated revenue that were relinquished by local governments in exchange for
an entitlement share of the state general fund were:
(a) personal property tax reimbursements pursuant to sections 167(1) through (5) and 169(6),
Chapter 584, Laws of 1999;
(b) vehicle, boat, and aircraft taxes and fees pursuant to:
(i) Title 23, chapter 2, part 5;
(ii) Title 23, chapter 2, part 6;
(iii) Title 23, chapter 2, part 8;
(iv) 61-3-317;
(v) 61-3-321;
(vi) Title 61, chapter 3, part 5, except for 61-3-509(3), as that subsection read prior to the
amendment of 61-3-509 in 2001;
(vii) Title 61, chapter 3, part 7;
(viii) 5% of the fees collected under 61-10-122;
(ix) 61-10-130;
(x) 61-10-148; and
(xi) 67-3-205;
(c) gaming revenue pursuant to Title 23, chapter 5, part 6, except for the permit fee in 23-5-
612(2)(a);
(d) district court fees pursuant to:
(i) 25-1-201, except those fees in 25-1-201(1)(d), (1)(g), and (1)(j);
(ii) 25-1-202;
(iii) 25-9-506; and
(iv) 27-9-103;
(e) certificate of title fees for manufactured homes pursuant to 15-1-116;
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(f) financial institution taxes collected pursuant to the former provisions of Title 15, chapter 31, part
7;
(g) all beer, liquor, and wine taxes pursuant to:
(i) 16-1-404;
(ii) 16-1-406; and
(iii) 16-1-411;
(h) late filing fees pursuant to 61-3-220;
(i) title and registration fees pursuant to 61-3-203;
(j) veterans' cemetery license plate fees pursuant to 61-3-459;
(k) county personalized license plate fees pursuant to 61-3-406;
(l) special mobile equipment fees pursuant to 61-3-431;
(m) single movement permit fees pursuant to 61-4-310;
(n) state aeronautics fees pursuant to 67-3-101; and
(o) department of natural resources and conservation payments in lieu of taxes pursuant to former
Title 77, chapter 1, part 5.
(3) Except as provided in subsection (7)(b), the total amount received by each local government in
the prior fiscal year as an entitlement share payment under this section is the base component for the
subsequent fiscal year distribution, and in each subsequent year the prior year entitlement share payment,
including any reimbursement payments received pursuant to subsection (7), is each local government's base
component. The sum of all local governments' base components is the fiscal year entitlement share pool.
(4) (a) Except as provided in subsections (4)(b)(iv) and (7)(b), the base entitlement share pool
must be increased annually by an entitlement share growth rate as provided for in this subsection (4). The
amount determined through the application of annual growth rates is the entitlement share pool for each fiscal
year.
(b) By October 1 of each year, the department shall calculate the growth rate of the entitlement
share pool for the next fiscal year in the following manner:
(i) The department shall calculate the entitlement share growth rate based on the ratio of two
factors of state revenue sources for the first, second, and third most recently completed fiscal years as
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recorded on the statewide accounting, budgeting, and human resource system. The first factor is the sum of the
revenue for the first and second previous completed fiscal years received from the sources referred to in
subsections (2)(b), (2)(c), and (2)(g) divided by the sum of the revenue for the second and third previous
completed fiscal years received from the same sources multiplied by 0.75. The second factor is the sum of the
revenue for the first and second previous completed fiscal years received from individual income tax as
provided in Title 15, chapter 30, and corporate income tax as provided in Title 15, chapter 31, divided by the
sum of the revenue for the second and third previous completed fiscal years received from the same sources
multiplied by 0.25.
(ii) Except as provided in subsections (4)(b)(iii) and (4)(b)(iv), the entitlement share growth rate is
the lesser of:
(A) the sum of the first factor plus the second factor; or
(B) 1.03 for counties, 1.0325 for consolidated local governments, and 1.035 for cities and towns.
(iii) In no instance can the entitlement growth factor be less than 1. Subject to subsection (4)(b)(iv),
the entitlement share growth rate is applied to the most recently completed fiscal year entitlement payment to
determine the subsequent fiscal year payment.
(iv) The entitlement share growth rate, as described in this subsection (4), is:
(A) for fiscal year 2018, 1.005;
(B) for fiscal year 2019, 1.0187;
(C) for fiscal year 2020 and thereafter, determined as provided in subsection (4)(b)(ii). The rate
must be applied to the entitlement payment for the previous fiscal year as if the payment had been calculated
using entitlement share growth rates for fiscal years 2018 and 2019 as provided in subsection (4)(b)(ii).
(5) As used in this section, "local government" means a county, a consolidated local government,
an incorporated city, and an incorporated town. A local government does not include a tax increment financing
district provided for in subsection (8). The county or consolidated local government is responsible for making an
allocation from the county's or consolidated local government's share of the entitlement share pool to each
special district within the county or consolidated local government in a manner that reasonably reflects each
special district's loss of revenue sources for which reimbursement is provided in this section. The allocation for
each special district that existed in 2002 must be based on the relative proportion of the loss of revenue in
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2002.
(6) (a) The entitlement share pools calculated in this section, the amounts distributed under 15-1-
123(4) for local governments, the funding provided for in subsection (8) of this section, and the amounts
distributed under 15-1-123(5) for tax increment financing districts are statutorily appropriated, as provided in 17-
7-502, from the general fund to the department for distribution to local governments.
(b) (i) The growth amount is the difference between the entitlement share pool in the current fiscal
year and the entitlement share pool in the previous fiscal year. The growth factor in the entitlement share must
be calculated separately for:
(A) counties;
(B) consolidated local governments; and
(C) incorporated cities and towns.
(ii) In each fiscal year, the growth amount for counties must be allocated as follows:
(A) 50% of the growth amount must be allocated based upon each county's percentage of the prior
fiscal year entitlement share pool for all counties; and
(B) 50% of the growth amount must be allocated based upon the percentage that each county's
population bears to the state population not residing within consolidated local governments as determined by
the latest interim year population estimates from the Montana department of commerce as supplied by the
United States bureau of the census.
(iii) In each fiscal year, the growth amount for consolidated local governments must be allocated as
follows:
(A) 50% of the growth amount must be allocated based upon each consolidated local
government's percentage of the prior fiscal year entitlement share pool for all consolidated local governments;
and
(B) 50% of the growth amount must be allocated based upon the percentage that each
consolidated local government's population bears to the state's total population residing within consolidated
local governments as determined by the latest interim year population estimates from the Montana department
of commerce as supplied by the United States bureau of the census.
(iv) In each fiscal year, the growth amount for incorporated cities and towns must be allocated as
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follows:
(A) 50% of the growth amount must be allocated based upon each incorporated city's or town's
percentage of the prior fiscal year entitlement share pool for all incorporated cities and towns; and
(B) 50% of the growth amount must be allocated based upon the percentage that each city's or
town's population bears to the state's total population residing within incorporated cities and towns as
determined by the latest interim year population estimates from the Montana department of commerce as
supplied by the United States bureau of the census.
(v) In each fiscal year, the amount of the entitlement share pool before the growth amount or
adjustments made under subsection (7) are applied is to be distributed to each local government in the same
manner as the entitlement share pool was distributed in the prior fiscal year.
(7) (a) If the legislature enacts a reimbursement provision that is to be distributed pursuant to this
section, the department shall determine the reimbursement amount as provided in the enactment and add the
appropriate amount to the entitlement share distribution under this section. The total entitlement share
distributions in a fiscal year, including distributions made pursuant to this subsection, equal the local fiscal year
entitlement share pool. The ratio of each local government's distribution from the entitlement share pool must
be recomputed to determine each local government's ratio to be used in the subsequent year's distribution
determination under subsections (6)(b)(ii)(A), (6)(b)(iii)(A), and (6)(b)(iv)(A).
(b) For fiscal year 2018 and thereafter, the growth rate provided for in subsection (4) does not
apply to the portion of the entitlement share pool attributable to the reimbursement provided for in 15-1-123(1)
and (2). The department shall calculate the portion of the entitlement share pool attributable to the
reimbursement in 15-1-123(1) and (2), including the application of the growth rate in previous fiscal years, for
counties, consolidated local governments, and cities and, for fiscal year 2018 and thereafter, apply the growth
rate for that portion of the entitlement share pool as provided in 15-1-123(3).
(c) The growth amount resulting from the application of the growth rate in 15-1-123(3) must be
allocated as provided in subsections (6)(b)(ii)(A), (6)(b)(iii)(A), and (6)(b)(iv)(A) of this section.
(d) The growth rate provided for in subsection (4) does not apply to the portion of the entitlement
share pool attributable to the reimbursement provided for in [section 8].
(8) (a) Except for a tax increment financing district entitled to a reimbursement under 15-1-123(5),
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if a tax increment financing district was not in existence during the fiscal year ending June 30, 2000, then the
tax increment financing district is not entitled to any funding. If a tax increment financing district referred to in
subsection (8)(b) terminates, then the funding for the district provided for in subsection (8)(b) terminates.
(b) One-half of the payments provided for in this subsection (8)(b) must be made by November 30
and the other half by May 31 of each year. Subject to subsection (8)(a), the entitlement share for tax increment
financing districts is as follows:
Flathead Kalispell - District 2 $4,638
Flathead Kalispell - District 3 37,231
Flathead Whitefish District 148,194
Gallatin Bozeman - downtown 31,158
Missoula Missoula - 1-1C 225,251
Missoula Missoula - 4-1C 30,009
(9) The estimated fiscal year entitlement share pool and any subsequent entitlement share pool for
local governments do not include revenue received from tax increment financing districts.
(10) When there has been an underpayment of a local government's share of the entitlement share
pool, the department shall distribute the difference between the underpayment and the correct amount of the
entitlement share. When there has been an overpayment of a local government's entitlement share, the local
government shall remit the overpaid amount to the department.
(11) A local government may appeal the department's estimation of the base component, the
entitlement share growth rate, or a local government's allocation of the entitlement share pool, according to the
uniform dispute review procedure in 15-1-211.
(12) (a) Except as provided in 2-7-517, a payment required pursuant to this section may not be
offset by a debt owed to a state agency by a local government in accordance with Title 17, chapter 4, part 1.
(b) A payment required pursuant to this section must be withheld if a local government:
(i) fails to meet a deadline established in 2-7-503(1), 7-6-611(2), 7-6-4024(3), or 7-6-4036(1); and
(ii) fails to remit any amounts collected on behalf of the state as required by 15-1-504 or as
otherwise required by law within 45 days of the end of a month.
(c) A payment required pursuant to this section may be withheld if, for more than 90 days, a local
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government fails to:
(i) file a financial report required by 15-1-504;
(ii) remit any amounts collected on behalf of the state as required by 15-1-504; or
(iii) remit any other amounts owed to the state or another taxing jurisdiction."
Section 13. Section 15-6-134, MCA, is amended to read:
"15-6-134. Class four property -- description -- taxable percentage -- definitions. (1) Class four
property includes:
(a) subject to subsection (1)(e), all land, except that specifically included in another class;
(b) subject to subsection (1)(e):
(i) all improvements, including single-family residences, trailers, manufactured homes, or mobile
homes used as a residence, except those specifically included in another class;
(ii) appurtenant improvements to the residences, including the parcels of land upon which the
residences are located and any leasehold improvements;
(iii) vacant residential lots; and
(iv) rental multifamily dwelling units.
(c) all improvements on land that is eligible for valuation, assessment, and taxation as agricultural
land under 15-7-202;
(d) , including 1 acre of real property beneath residential improvements on land described in 15-6-
133(1)(c). The 1 acre must be valued at market value.
(d) and 1 acre of real property beneath an improvement used as a residence on land eligible for
valuation, assessment, and taxation as forest land under 15-6-143. The 1 acre must be valued at market value.
(e) real property beneath commercial improvements and as much of the surrounding land that is
reasonably required to support the commercial improvements on land described in 15-6-133(1)(c) and real
property beneath commercial improvements and as much of the surrounding land that is reasonably required to
support the commercial improvements on land eligible for valuation, assessment, and taxation as forest land
under 15-6-143. The land must be valued at market value.
(e)(f) all commercial and industrial property, as defined in 15-1-101, and including:
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(i) all commercial and industrial property that is used or owned by an individual, a business, a
trade, a corporation, a limited liability company, or a partnership and that is used primarily for the production of
income;
(ii) all golf courses, including land and improvements actually and necessarily used for that
purpose, that consist of at least nine holes and not less than 700 lineal yards;
(iii) commercial buildings and parcels of land upon which the buildings are situated; and
(iv) vacant commercial lots.
(2) If a property includes both residential and commercial uses, the property is classified and
appraised as follows:
(a) the land use with the highest percentage of total value is the use that is assigned to the
property; and
(b) the improvements are apportioned according to the use of the improvements.
(3) (a) Except as provided in Subject to 15-24-1402, 15-24-1501, and 15-24-1502, and subsection
class four property is taxed as provided in this subsection (3).
(a) Except as provided in subsections (3)(b) and (3)(c), class four residential property described in
subsections (1)(a) through (1)(d) of this section is taxed at 1.35% 1.9% of market value.
(b) (i) The tax rate for class four residential property described in subsections (1)(a), (1)(b)(i),
(1)(b)(ii), and (1)(d) of this section that qualifies for the homestead reduced tax rate provided for in [section 2 ]
or the rental property reduced tax rate provided for in [section 3] is:
(A) 0.76% for the market value that is less than or equal to the median residential value;
(B) 0.9% for the market value that is greater than the median residential value and less than 2
times the median residential value;
(C) 1.1% for the market value that is 2 times the median residential value or greater and less than
4 times the median residential value; and
(D) 1.9% for the market value that is 4 times the median residential value or greater.
(ii) The tax rate for a rental multifamily dwelling unit described in subsection (1)(b)(iv) that qualifies
for the rental property reduced tax rate is 1.1%.
(b)The tax rate for the portion of the market value of a single-family residential dwelling in excess of
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$1.5 million is the residential property tax rate in subsection (3)(a) multiplied by 1.4.
(c) The tax rate for a property described in subsection (1)(c) that does not qualify for the
homestead reduced tax rate or the rental property reduced tax rate is 1.35%.
(c)(d) The tax rate for commercial and industrial property described in subsections (1)(e) and (1)(f),
except property described in subsection (1)(f)(ii), is: the residential property tax rate in subsection (3)(a)
multiplied by 1.4
(i) for the market value less than 6 times the median commercial and industrial value, 1.5%; and
(ii) for the market value 6 times the median commercial and industrial value or greater, 1.9%.
(4)(e) Property described in subsection (1)(e)(ii) (1)(f)(ii) is taxed at one-half the tax rate established
in subsection (3)(c) (3)(d).
(4) The department shall calculate the median residential value and median commercial and
industrial value every 2 years as part of the periodic reappraisal provided for in 15-7-111.
(5) As used in this section, the following definitions apply:
(a) "Median commercial and industrial value" means the median value of class four commercial
and industrial property located in the state of Montana rounded to the nearest thousand dollars.
(b) "Median residential value" means the median value of a single-family residence located in the
state of Montana rounded to the nearest thousand dollars."
Section 14. Section 15-6-134, MCA, is amended to read:
"15-6-134. Class four property -- description -- taxable percentage. (1) Class four property
includes:
(a) subject to subsection (1)(e), all land, except that specifically included in another class;
(b) subject to subsection (1)(e):
(i) all improvements, including single-family residences, trailers, manufactured homes, or mobile
homes used as a residence, except those specifically included in another class;
(ii) appurtenant improvements to the residences, including the parcels of land upon which the
residences are located and any leasehold improvements;
(iii) vacant residential lots; and
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(iv) rental multifamily dwelling units.
(c) all improvements on land that is eligible for valuation, assessment, and taxation as agricultural
land under 15-7-202, including 1 acre of real property beneath improvements on land described in 15-6-
133(1)(c). The 1 acre must be valued at market value.
(d) 1 acre of real property beneath an improvement used as a residence on land eligible for
valuation, assessment, and taxation as forest land under 15-6-143. The 1 acre must be valued at market value.
(e) all commercial and industrial property, as defined in 15-1-101, and including:
(i) all commercial and industrial property that is used or owned by an individual, a business, a
trade, a corporation, a limited liability company, or a partnership and that is used primarily for the production of
income;
(ii) all golf courses, including land and improvements actually and necessarily used for that
purpose, that consist of at least nine holes and not less than 700 lineal yards;
(iii) commercial buildings and parcels of land upon which the buildings are situated; and
(iv) vacant commercial lots.
(2) If a property includes both residential and commercial uses, the property is classified and
appraised as follows:
(a) the land use with the highest percentage of total value is the use that is assigned to the
property; and
(b) the improvements are apportioned according to the use of the improvements.
(3) (a) Except as provided in 15-24-1402, 15-24-1501, 15-24-1502, and subsection (3)(b), class
four residential property described in subsections (1)(a) through (1)(d) of this section is taxed at 1.35% 0.76%
of market value.
(b) The tax rate for the portion of the market value of a single-family residential dwelling in excess
of $1.5 million is the residential property tax rate in subsection (3)(a) multiplied by 1.4.
(c) The tax rate for commercial property is the residential property tax rate in subsection (3)(a)
multiplied by 1.4 1.89%.
(4) Property described in subsection (1)(e)(ii) is taxed at one-half the tax rate established in
subsection (3)(c)."
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Section 15. Section 15-7-102, MCA, is amended to read:
"15-7-102. Notice of classification, market value, and taxable value to owners -- appeals. (1) (a)
Except as provided in 15-7-138, the department shall mail or provide electronically to each owner or purchaser
under contract for deed a notice that includes the land classification, market value, and taxable value of the
land and improvements owned or being purchased. A notice must be mailed or, with property owner consent,
provided electronically to the owner only if one or more of the following changes pertaining to the land or
improvements have been made since the last notice:
(i) change in ownership;
(ii) change in classification;
(iii) change in valuation; or
(iv) addition or subtraction of personal property affixed to the land.
(b) The notice must include the following for the taxpayer's informational and informal classification
and appraisal review purposes:
(i) a notice of the availability of all the property tax assistance programs available to property
taxpayers, including the intangible land value assistance program provided for in 15-6-240, the property tax
assistance programs provided for in Title 15, chapter 6, part 3, the homestead reduced tax rate provided for in
[section 2], the rental property reduced tax rate provided for in [section 3], and the residential property tax credit
for the elderly provided for in 15-30-2337 through 15-30-2341;
(ii) the total amount of mills levied against the property in the prior year;
(iii) the market value for the prior reappraisal cycle;
(iv) if the market value has increased by more than 10%, an explanation for the increase in
valuation;
(v) a statement that the notice is not a tax bill; and
(vi) a taxpayer option to request an informal classification and appraisal review by checking a box
on the notice and returning it to the department.
(c) When the department uses an appraisal method that values land and improvements as a unit,
including the sales comparison approach for residential condominiums or the income approach for commercial
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property, the notice must contain a combined appraised value of land and improvements.
(d) Any misinformation provided in the information required by subsection (1)(b) does not affect the
validity of the notice and may not be used as a basis for a challenge of the legality of the notice.
(2) (a) Except as provided in subsection (2)(c), the department shall assign each classification and
appraisal to the correct owner or purchaser under contract for deed and mail or provide electronically the notice
in written or electronic form, adopted by the department, containing sufficient information in a comprehensible
manner designed to fully inform the taxpayer as to the classification and appraisal of the property and of
changes over the prior tax year.
(b) The notice must advise the taxpayer that in order to be eligible for a refund of taxes from an
appeal of the classification or appraisal, the taxpayer is required to pay the taxes under protest as provided in
15-1-402.
(c) The department is not required to mail or provide electronically the notice to a new owner or
purchaser under contract for deed unless the department has received the realty transfer certificate from the
clerk and recorder as provided in 15-7-304 and has processed the certificate before the notices required by
subsection (2)(a) are mailed or provided electronically. The department shall notify the county tax appeal board
of the date of the mailing or the date when the taxpayer is informed the information is available electronically.
(3) (a) If the owner of any land and improvements is dissatisfied with the appraisal as it reflects the
market value of the property as determined by the department or with the classification of the land or
improvements, the owner may request an informal classification and appraisal review by submitting an
objection on written or electronic forms provided by the department for that purpose or by checking a box on the
notice and returning it to the department in a manner prescribed by the department.
(i) For property other than class three property described in 15-6-133, class four property
described in 15-6-134, class ten property described in 15-6-143, and centrally assessed property described in
15-23-101, the objection must be submitted within 30 days from the date on the notice.
(ii) For class three property described in 15-6-133, class four property described in 15-6-134, and
class ten property described in 15-6-143, the objection may be made only once each valuation cycle. An
objection must be made in writing or by checking a box on the notice within 30 days from the date on the
classification and appraisal notice for a reduction in the appraised value to be considered for both years of the
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2-year valuation cycle. An objection made more than 30 days from the date of the classification and appraisal
notice will be applicable only for the second year of the 2-year valuation cycle. For an objection to apply to the
second year of the valuation cycle, the taxpayer shall make the objection in writing or by checking a box on the
notice no later than June 1 of the second year of the valuation cycle or, if a classification and appraisal notice is
received in the second year of the valuation cycle, within 30 days from the date on the notice.
(iii) For centrally assessed property described in 15-23-101(2)(a), the objection must be submitted
within 20 days from the date on the notice. A taxpayer may submit an objection up to 10 days after this deadline
on request to the department.
(iv) (A) For centrally assessed property described in 15-23-101(2)(b) and (2)(c), an objection to the
valuation or classification may be made only once each valuation cycle. An objection must be made in writing
within the time period specified in subsection (3)(a)(iii) for a reduction in the appraised value to be considered
for both years of the 2-year valuation cycle. An objection made after the deadline specified in subsection
(3)(a)(iii) will be applicable only for the second year of the 2-year valuation cycle. For an objection to apply to
the second year of the valuation cycle, the taxpayer shall make the objection in writing no later than June 1 of
the second year of the valuation cycle or, if a classification and appraisal notice is received in the second year
of the valuation cycle, within the time period specified in subsection (3)(a)(iii).
(B) If a property owner has exhausted the right to object to a valuation, as provided for in
subsection (3)(a)(iv)(A), the property owner may ask the department to consider extenuating circumstances to
adjust the value of property described in 15-23-101(2)(b) or (2)(c). Occurrences that may result in an
adjustment to the value include but are not limited to extraordinary, unusual, or infrequent events that are
material in nature and of a character different from the typical or customary business operations, that are not
expected to recur frequently, and that are not normally considered in the evaluation of the operating results of a
business, including bankruptcies, acquisitions, sales of assets, or mergers.
(b) If the objection relates to residential or commercial property and the objector agrees to the
confidentiality requirements, the department shall provide to the objector, by posted mail or electronically, within
8 weeks of submission of the objection, the following information:
(i) the methodology and sources of data used by the department in the valuation of the property;
and
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(ii) if the department uses a blend of evaluations developed from various sources, the reasons that
the methodology was used.
(c) At the request of the objector or a representative of the objector, and only if the objector or
representative signs a written or electronic confidentiality agreement, the department shall provide in written or
electronic form:
(i) comparable sales data used by the department to value the property;
(ii) sales data used by the department to value residential property in the property taxpayer's
market model area; and
(iii) if the cost approach was used by the department to value residential property, the
documentation required in 15-8-111(3) regarding why the comparable sales approach was not reliable.
(d) For properties valued using the income approach as one approximation of market value, notice
must be provided that the taxpayer will be given a form to acknowledge confidentiality requirements for the
receipt of all aggregate model output that the department used in the valuation model for the property.
(e) The review must be conducted informally and is not subject to the contested case procedures
of the Montana Administrative Procedure Act. As a part of the review, the department may consider the actual
selling price of the property and other relevant information presented by the taxpayer in support of the
taxpayer's opinion as to the market value of the property. The department shall consider an independent
appraisal provided by the taxpayer if the appraisal meets standards set by the Montana board of real estate
appraisers and the appraisal was completed within 6 months of the valuation date pursuant to 15-8-201. If the
department does not use the appraisal provided by the taxpayer in conducting the appeal, the department shall
provide to the taxpayer the reason for not using the appraisal. The department shall give reasonable notice to
the taxpayer of the time and place of the review.
(f) After the review, the department shall determine the correct appraisal and classification of the
land or improvements and notify the taxpayer of its determination by mail or electronically. The department may
not determine an appraised value that is higher than the value that was the subject of the objection unless the
reason for an increase was the result of a physical change in the property or caused by an error in the
description of the property or data available for the property that is kept by the department and used for
calculating the appraised value. In the notification, the department shall state its reasons for revising the
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classification or appraisal. When the proper appraisal and classification have been determined, the land must
be classified and the improvements appraised in the manner ordered by the department.
(4) Whether a review as provided in subsection (3) is held or not, the department may not adjust
an appraisal or classification upon the taxpayer's objection unless:
(a) the taxpayer has submitted an objection on written or electronic forms provided by the
department or by checking a box on the notice; and
(b) the department has provided to the objector by mail or electronically its stated reason in writing
for making the adjustment.
(5) A taxpayer's written objection or objection made by checking a box on the notice and
supplemental information provided by a taxpayer that elects to check a box on the notice to a classification or
appraisal and the department's notification to the taxpayer of its determination and the reason for that
determination are public records. The department shall make the records available for inspection during regular
office hours.
(6) Except as provided in 15-2-302 and 15-23-102, if a property owner feels aggrieved by the
classification or appraisal made by the department after the review provided for in subsection (3), the property
owner has the right to first appeal to the county tax appeal board and then to the Montana tax appeal board,
whose findings are final subject to the right of review in the courts. The appeal to the county tax appeal board,
pursuant to 15-15-102, must be filed within 30 days from the date on the notice of the department's
determination. A county tax appeal board or the Montana tax appeal board may consider the actual selling price
of the property, independent appraisals of the property, negative property features that differentiate the subject
property from the department's comparable sales, and other relevant information presented by the taxpayer as
evidence of the market value of the property. If the county tax appeal board or the Montana tax appeal board
determines that an adjustment should be made, the department shall adjust the base value of the property in
accordance with the board's order."
Section 16. Section 15-15-101, MCA, is amended to read:
"15-15-101. County tax appeal board -- meetings and compensation. (1) The board of county
commissioners of each county shall appoint a county tax appeal board, with a minimum of three members and
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with the members to serve staggered terms of 3 years each. The members of each county tax appeal board
must be residents of the county in which they serve. A person may not be a member of a county tax appeal
board if the person was an employee of the department less than 36 months before the date of appointment.
(2) (a) The members receive compensation as provided in subsection (2)(b) and travel expenses,
as provided for in 2-18-501 through 2-18-503, only when the county tax appeal board meets to hear taxpayers'
appeals from property tax assessments or when they are attending meetings called by the Montana tax appeal
board. Travel expenses and compensation must be paid from the appropriation to the Montana tax appeal
board.
(b) (i) The daily compensation for a member is as follows:
(A) $45 for 4 hours of work or less; and
(B) $90 for more than 4 hours of work.
(ii) For the purpose of calculating work hours in this subsection (2)(b), work includes hearing tax
appeals, deliberating with other board members, and attending meetings called by the Montana tax appeal
board.
(3) Office space and equipment for the county tax appeal boards must be furnished by the county.
All other incidental expenses must be paid from the appropriation of the Montana tax appeal board.
(4) The county tax appeal board shall hold an organizational meeting each year on the date of its
first scheduled hearing, immediately before conducting the business for which the hearing was otherwise
scheduled. At the organizational meeting, the members shall choose one member as the presiding officer of the
board. The county tax appeal board shall continue in session from July 1 of the current tax year until December
31 of the current tax year to hear protests concerning assessments made by the department until the business
of hearing protests is disposed of and may meet after December 31 to hear an appeal at the discretion of the
county tax appeal board.
(5) In counties that have appointed more than three members to the county tax appeal board, only
three members shall hear each appeal. The presiding officer shall select the three members hearing each
appeal.
(6) In connection with an appeal, the county tax appeal board may change any assessment or fix
the assessment at some other level and determine eligibility for the homestead reduced tax rate provided for in
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[section 2 ] or the rental property reduced tax rate provided for in [section 3]. Upon notification by the county tax
appeal board, the county clerk and recorder shall publish a notice to taxpayers, giving the time the county tax
appeal board will be in session to hear scheduled protests concerning assessments and the latest date the
county tax appeal board may take applications for the hearings. The notice must be published in a newspaper if
any is printed in the county or, if none, then in the manner that the county tax appeal board directs. The notice
must be published by May 15 of the current tax year.
(7) Challenges to a department rule governing the assessment of property or to an assessment
procedure apply only to the taxpayer bringing the challenge and may not apply to all similarly situated taxpayers
unless an action is brought in the district court as provided in 15-1-406."
Section 17. Section 15-15-102, MCA, is amended to read:
"15-15-102. Application for reduction in valuation -- reduced tax rate. (1) The county tax appeal
board may not reduce the valuation of property may not be reduced by the county tax appeal board or review
eligibility for the homestead reduced tax rate provided for in [section 2 ] or the rental property reduced tax rate
provided for in [section 3] unless either the taxpayer or the taxpayer's agent makes and files a written
application for reduction with the county tax appeal board.
(2) The application for reduction may be obtained at the local appraisal office or from the county
tax appeal board. The completed application must be submitted to the county clerk and recorder. The date of
receipt is the date stamped on the appeal form by the county clerk and recorder upon receipt of the form. The
county tax appeal board is responsible for obtaining the applications from the county clerk and recorder.
(3) One application for reduction may be submitted during each valuation cycle. The application
must be submitted within the time periods provided for in 15-7-102(3)(a) and [section 5].
(4) A taxpayer who receives an informal review by the department of revenue as provided in 15-7-
102(3)(a)(i) and (3)(a)(ii) or [section 5] may appeal the decision of the department of revenue to the county tax
appeal board as provided in 15-7-102(6). The taxpayer may not file a subsequent application for reduction for
the same property with the county tax appeal board during the same valuation cycle.
(5) If the department's determination after review is not made in time to allow the county tax appeal
board to review the matter during the current tax year, the appeal must be reviewed during the next tax year,
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but the decision by the county tax appeal board is effective for the year in which the request for review was filed
with the department. The application must state the post-office address of the applicant, specifically describe
the property involved, and state the facts upon which it is claimed the reduction should be made."
Section 18. Section 15-15-103, MCA, is amended to read:
"15-15-103. Examination of applicant -- failure to hear application. (1) Before the county tax
appeal board grants any application or makes any reduction applied for, it shall examine on oath the person or
agent making the application with regard to the value of the property of the person or eligibility for the
homestead reduced tax rate provided for in [section 2] or the rental property reduced tax rate provided for in
[section 3]. A reduction may not be made unless the applicant makes an application, as provided in 15-15-102,
and attends the county board hearing. An appeal of the county board's decision may not be made to the
Montana tax appeal board unless the person or the person's agent has exhausted the remedies available
through the county board. In order to exhaust the remedies, the person or the person's agent shall attend the
county board hearing. On written request by the person or the person's agent and on the written concurrence of
the department, the county board may waive the requirement that the person or the person's agent attend the
hearing. The testimony of all witnesses at the hearing and the deliberation of the county tax appeal board in
rendering a decision must be electronically recorded and preserved for 1 year. If the decision of the county
board is appealed, the record of the proceedings, including the electronic recording of all testimony and the
deliberation of the county tax appeal board, must be forwarded, together with all exhibits, to the Montana board.
The date of the hearing, the proceedings before the county board, and the decision must be entered upon the
minutes of the county board, and the county board shall notify the applicant of its decision by mail within 3 days.
A copy of the minutes of the county board must be transmitted to the Montana board no later than 3 days after
the county board holds its final hearing of the year.
(2) (a) Except as provided in 15-15-201, if a county board refuses or fails to hear a taxpayer's
timely application for a reduction in valuation of property or eligibility for a reduced tax rate, the taxpayer's
application is considered to be granted on the day following the county board's final meeting for that year. The
department shall enter the appraisal, or classification, or tax rate sought in the application in the property tax
record. An application is not automatically granted for the following appeals:
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(i) those listed in 15-2-302(1); and
(ii) if a taxpayer's appeal from the department's determination of classification or appraisal made
pursuant to 15-7-102 was not received in time, as provided for in 15-15-102, to be considered by the county
board during its current session.
(b) The county board shall provide written notification of each application that was automatically
granted pursuant to subsection (2)(a) to the department, the Montana board, and any affected municipal
corporation. The notice must include the name of the taxpayer and a description of the subject property.
(3) The county tax appeal board shall consider an independent appraisal provided by the taxpayer
if the appraisal meets standards set by the Montana board of real estate appraisers and the appraisal was
conducted within 6 months of the valuation date. If the county tax appeal board does not use the appraisal
provided by the taxpayer in conducting the appeal, the county board shall provide to the taxpayer the reason for
not using the appraisal."
Section 19. Section 15-16-101, MCA, is amended to read:
"15-16-101. Treasurer to publish notice -- manner of publication. (1) Within 10 days after the
receipt of the property tax record, the county treasurer shall publish a notice specifying:
(a) that one-half of all taxes levied and assessed will be due and payable before 5 p.m. on the next
November 30 or within 30 days after the notice is postmarked and that unless paid prior to that time the amount
then due will be delinquent and will draw interest at the rate of 5/6 of 1% a month from the time of delinquency
until paid and 2% will be added to the delinquent taxes as a penalty;
(b) that one-half of all taxes levied and assessed will be due and payable on or before 5 p.m. on
the next May 31 and that unless paid prior to that time the taxes will be delinquent and will draw interest at the
rate of 5/6 of 1% a month from the time of delinquency until paid and 2% will be added to the delinquent taxes
as a penalty; and
(c) the time and place at which payment of taxes may be made.
(2) (a) The county treasurer shall send to the last-known address of each taxpayer a written notice,
postage prepaid, showing the amount of taxes and assessments due for the current year and the amount due
and delinquent for other years. The written notice must include:
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(i) the taxable value of the property;
(ii) the total mill levy applied to that taxable value;
(iii) itemized city services and special improvement district assessments collected by the county;
(iv) the number of the school district in which the property is located;
(v) the amount of the total tax due itemized by mill levy that is levied as city tax, county tax, state
tax, school district tax, and other tax;
(vi) an indication of which mill levies are voted levies, including voted levies to impose a new mill
levy, to increase a mill levy that is required to be submitted to the electors, or to exceed the mill levy limit
provided for in 15-10-420;
(vii) except as provided in subsection (2)(c), an itemization of the taxes due for each mill levy and a
comparison to the amount due for each mill levy in the prior year; and
(viii) a notice of the availability of all the property tax assistance programs available to property
taxpayers, including the intangible land value assistance program provided for in 15-6-240, the property tax
assistance programs under Title 15, chapter 6, part 3, the homestead reduced tax rate provided for in [section
2], the rental property reduced tax rate provided for in [section 3], and the residential property tax credit for the
elderly under 15-30-2337 through 15-30-2341.
(b) If a tax lien is attached to the property, the notice must also include, in a manner calculated to
draw attention, a statement that a tax lien is attached to the property, that failure to respond will result in loss of
property, and that the taxpayer may contact the county treasurer for complete information.
(c) The information required in subsection (2)(a)(vii) may be posted on the county treasurer's
website instead of being included on the written notice.
(3) The municipality shall, upon request of the county treasurer, provide the information to be
included under subsection (2)(a)(iii) ready for mailing.
(4) The notice in every case must be given as provided in 7-1-2121. Failure to publish or post
notices does not relieve the taxpayer from any tax liability. Any failure to give notice of the tax due for the
current year or of delinquent tax will not affect the legality of the tax.
(5) If the department revises an assessment that results in an additional tax of $5 or less, an
additional tax is not owed and a new tax bill does not need to be prepared."
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Section 20. Section 15-17-125, MCA, is amended to read:
"15-17-125. Attachment of tax lien and preparation of tax lien certificate. (1) (a) The county
treasurer shall attach a tax lien no later than the first working day in August to properties on which the taxes are
delinquent and for which proper notification was given as provided in 15-17-122 and subsection (4) of this
section. Upon attachment of a tax lien, the county is the possessor of the tax lien unless the tax lien is assigned
pursuant to 15-17-323.
(b) The county treasurer may not attach a tax lien to a property on which taxes are delinquent but
for which proper notice was not given.
(2) After attaching a tax lien, the county treasurer shall prepare a tax lien certificate that must
contain:
(a) the date on which the property taxes became delinquent;
(b) the date on which a property tax lien was attached to the property;
(c) the name and address of record of the person to whom the taxes were assessed;
(d) a description of the property on which the taxes were assessed;
(e) a separate listing of the amount of the delinquent taxes, penalties, interest, and costs;
(f) a statement that the tax lien certificate represents a lien on the property that may lead to the
issuance of a tax deed for the property;
(g) a statement specifying the date on which the county or an assignee will be entitled to a tax
deed; and
(h) an identification number corresponding to the tax lien certificate.
(3) The tax lien certificate must be signed by the county treasurer. A copy of the tax lien certificate
must be filed by the treasurer in the office of the county clerk. A copy of the tax lien certificate must also be
mailed to the person to whom the taxes were assessed, at the address of record, together with a notice that the
person may contact the county treasurer for further information on property tax liens.
(4) Prior to attaching a tax lien to the property, the county treasurer shall send notice of the
pending attachment of a tax lien to the person to whom the property was assessed. The notice must include the
information listed in subsection (2), state that the tax lien may be assigned to a third party, and provide notice of
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the availability of all the property tax assistance programs available to property taxpayers, including the
property tax assistance programs under Title 15, chapter 6, part 3, the homestead reduced tax rate provided for
in [section 2], the rental property reduced tax rate provided for in [section 3], and the residential property tax
credit for the elderly under 15-30-2337 through 15-30-2341. The notice must have been mailed at least 2 weeks
prior to the date on which the county treasurer attaches the tax lien.
(5) The county treasurer shall file the tax lien certificate with the county clerk and recorder."
Section 21. Section 15-30-2120, MCA, is amended to read:
"15-30-2120. Adjustments to federal taxable income to determine Montana taxable income. (1)
The items in subsection (2) are added to and the items in subsection (3) are subtracted from federal taxable
income to determine Montana taxable income.
(2) The following are added to federal taxable income:
(a) to the extent that it is not exempt from taxation by Montana under federal law, interest from
obligations of a territory or another state or any political subdivision of a territory or another state and exempt-
interest dividends attributable to that interest except to the extent already included in federal taxable income;
(b) that portion of a shareholder's income under subchapter S. of Chapter 1 of the Internal
Revenue Code that has been reduced by any federal taxes paid by the subchapter S. corporation on the
income;
(c) depreciation or amortization taken on a title plant as defined in 33-25-105;
(d) the recovery during the tax year of an amount deducted in any prior tax year to the extent that
the amount recovered reduced the taxpayer's Montana income tax in the year deducted;
(e) an item of income, deduction, or expense to the extent that it was used to calculate federal
taxable income if the item was also used to calculate a credit against a Montana income tax liability;
(f) a deduction for an income distribution from an estate or trust to a beneficiary that was included
in the federal taxable income of an estate or trust in accordance with sections 651 and 661 of the Internal
Revenue Code, 26 U.S.C. 651 and 661;
(g) a withdrawal from a medical care savings account provided for in Title 15, chapter 61, used for
a purpose other than an eligible medical expense or long-term care of the employee or account holder or a
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dependent of the employee or account holder;
(h) a withdrawal from a first-time home buyer savings account provided for in Title 15, chapter 63,
used for a purpose other than for eligible costs for the purchase of a single-family residence;
(i) for a taxpayer that deducts the qualified business income deduction pursuant to section 199A
of the Internal Revenue Code, 26 U.S.C. 199A, an amount equal to the qualified business income deduction
claimed;
(j) for an individual taxpayer that deducts state income taxes pursuant to section 164(a)(3) of the
Internal Revenue Code, 26 U.S.C. 164(a)(3), an additional amount equal to the state income tax deduction
claimed, not to exceed the amount required to reduce the federal itemized amount computed under section 161
of the Internal Revenue Code, 26 U.S.C. 161, to the amount of the federal standard deduction allowable under
section 63(c) of the Internal Revenue Code, 26 U.S.C. 63(c); and
(k) for a pass-through entity, estate, or trust, the amount of state income taxes deducted pursuant
to section 164(a)(3) of the Internal Revenue Code, 26 U.S.C 164(a)(3).
(3) To the extent they are included as income or gain or not already excluded as a deduction or
expense in determining federal taxable income, the following are subtracted from federal taxable income:
(a) a deduction for an income distribution from an estate or trust to a beneficiary in accordance
with sections 651 and 661 of the Internal Revenue Code, 26 U.S.C. 651 and 661, recalculated according to the
additions and subtractions in subsections (2) and (3)(b) through (3)(o) (3)(p);
(b) if exempt from taxation by Montana under federal law:
(i) interest from obligations of the United States government and exempt-interest dividends
attributable to that interest; and
(ii) railroad retirement benefits;
(c) (i) salary received from the armed forces by residents of Montana who are serving on active
duty in the regular armed forces and who entered into active duty from Montana;
(ii) the salary received by residents of Montana for active duty in the national guard. For the
purposes of this subsection (3)(c)(ii), "active duty" means duty performed under an order issued to a national
guard member pursuant to:
(A) Title 10, U.S.C.; or
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(B) Title 32, U.S.C., for a homeland defense activity, as defined in 32 U.S.C. 901, or a contingency
operation, as defined in 10 U.S.C. 101, and the person was a member of a unit engaged in a homeland
defense activity or contingency operation.
(iii) the amount received by a beneficiary pursuant to 10-1-1201; and
(iv) all payments made under the World War I bonus law, the Korean bonus law, and the veterans'
bonus law. Any income tax that has been or may be paid on income received from the World War I bonus law,
Korean bonus law, and the veterans' bonus law is considered an overpayment and must be refunded upon the
filing of an amended return and a verified claim for refund on forms prescribed by the department in the same
manner as other income tax refund claims are paid.
(d) annual contributions and income in a medical care savings account provided for in Title 15,
chapter 61, and any withdrawal for payment of eligible medical expenses or for the long-term care of the
employee or account holder or a dependent of the employee or account holder;
(e) contributions or earnings withdrawn from a family education savings account provided for in
Title 15, chapter 62, or from a qualified tuition program established and maintained by another state as
provided in section 529(b)(1)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 529(b)(1)(A)(ii), for qualified
education expenses, as defined in 15-62-103, of a designated beneficiary;
(f) interest and other income related to contributions that were made prior to January 1, 2024, that
are retained in a first-time home buyer savings account provided for in Title 15, chapter 63, and any withdrawal
for payment of eligible costs for the first-time purchase of a single-family residence;
(g) for each taxpayer that has attained the age of 65, an additional subtraction of $5,500;
(h) the amount of a scholarship to an eligible student by a student scholarship organization
pursuant to 15-30-3104;
(i) a payment received by a private landowner for providing public access to public land pursuant
to Title 76, chapter 17, part 1;
(j) the amount of any refund or credit for overpayment of income taxes imposed by this state or
any other taxing jurisdiction to the extent included in gross income for federal income tax purposes but not
previously allowed as a deduction for Montana income tax purposes;
(k) the recovery during the tax year of any amount deducted in any prior tax year to the extent that
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the recovered amount did not reduce the taxpayer's Montana income tax in the year deducted;
(l) the amount of the gain recognized from the sale or exchange of a mobile home park as
provided in 15-31-163;
(m) payments from the Montana end of watch trust as provided in 2-15-2041;
(n) (i) subject to subsection (9), a portion of military pensions or military retirement income as
calculated pursuant to subsection (8) that is received by a retired member of:
(A) the armed forces of the United States, as defined in 10 U.S.C. 101;
(B) the Montana army national guard or the army national guard of other states;
(C) the Montana air national guard or the air national guard of other states; or
(D) a reserve component, as defined in 38 U.S.C. 101, of the United States armed forces; and
(ii) subject to subsection (9), up to 50% of all income received as survivor benefits for military
service provided for in subsection (3)(n)(i)(A) through (3)(n)(i)(D); and
(o) the amount of the property tax rebate received under 15-1-2302; and
(p) the amount of the property tax rebate received under [section 10].
(4) (a) A taxpayer who, in determining federal taxable income, has reduced the taxpayer's
business deductions:
(i) by an amount for wages and salaries for which a federal tax credit was elected under sections
38 and 51(a) of the Internal Revenue Code, 26 U.S.C. 38 and 51(a), is allowed to deduct the amount of the
wages and salaries paid regardless of the credit taken; or
(ii) for which a federal tax credit was elected under the Internal Revenue Code is allowed to
deduct the amount of the business expense paid when there is no corresponding state income tax credit or
deduction, regardless of the credit taken.
(b) The deductions in subsection (4)(a) must be made in the year that the wages, salaries, or
business expenses were used to compute the credit. In the case of a partnership or small business corporation,
the deductions in subsection (4)(a) must be made to determine the amount of income or loss of the partnership
or small business corporation.
(5) (a) An individual who contributes to one or more accounts established under the Montana
family education savings program or to a qualified tuition program established and maintained by another state
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as provided in section 529(b)(1)(A)(ii) of the Internal Revenue Code, 26 U.S.C. 529(b)(1)(A)(ii), may reduce
taxable income by the lesser of $3,000 or the amount of the contribution. In the case of married taxpayers, each
spouse is entitled to a reduction, not in excess of $3,000, for the spouses' contributions to the accounts.
Spouses may jointly elect to treat half of the total contributions made by the spouses as being made by each
spouse. The reduction in taxable income under this subsection (5)(a) applies only with respect to contributions
to an account of which the account owner is the taxpayer, the taxpayer's spouse, or the taxpayer's child or
stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of subsection (2)(d) do not
apply with respect to withdrawals of contributions that reduced federal taxable income.
(b) Contributions made pursuant to this subsection (5) are subject to the recapture tax provided for
in 15-62-208.
(6) (a) An individual who contributes to one or more accounts established under the Montana
achieving a better life experience program or to a qualified program established and maintained by another
state may reduce taxable income by the lesser of $3,000 or the amount of the contribution. In the case of
married taxpayers, each spouse is entitled to a reduction, not to exceed $3,000, for the spouses' contributions
to the accounts. Spouses may jointly elect to treat one-half of the total contributions made by the spouses as
being made by each spouse. The reduction in taxable income under this subsection (6)(a) applies only with
respect to contributions to an account for which the account owner is the taxpayer, the taxpayer's spouse, or
the taxpayer's child or stepchild if the taxpayer's child or stepchild is a Montana resident. The provisions of
subsection (2)(d) do not apply with respect to withdrawals of contributions that reduced taxable income.
(b) Contributions made pursuant to this subsection (6) are subject to the recapture tax provided in
53-25-118.
(7) By November 1 of each year, the department shall multiply the subtraction from federal taxable
income for a taxpayer that has attained the age of 65 contained in subsection (3)(g) by the inflation factor for
that tax year, rounding the result to the nearest $10. The resulting amount is effective for that tax year and must
be used as the basis for the subtraction from federal taxable income determined under subsection (3)(g).
(8) (a) Subject to subsection (9), the subtraction in subsection (3)(n)(i) is equal to the lesser of:
(i) the amount of Montana source wage income on the return; or
(ii) 50% of the taxpayer's military pension or military retirement income.
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(b) For the purposes of subsection (8)(a)(i), "Montana source wage income" means:
(i) wages, salary, tips, and other compensation for services performed in the state;
(ii) net income from a trade, business, profession, or occupation carried on in the state; and
(iii) net income from farming activities carried on in the state.
(9) The subtractions in subsection (3)(n):
(a) may only be claimed by a person who:
(i) becomes a resident of the state after June 30, 2023; or
(ii) was a resident of the state before receiving military pension or military retirement income and
remained a resident after receiving military pension or military retirement income;
(b) may only be claimed for 5 consecutive years after satisfying the provisions of subsection (9)(a);
and
(c) are not available if a taxpayer claimed the exemption before becoming a nonresident.
(Subsection (3)(o) terminates June 30, 2025--sec. 10, Ch. 47, L. 2023; subsections (3)(n), (8), and (9) terminate
December 31, 2033--sec. 4, Ch. 650, L. 2023.)"
Section 22. Property tax assistance account. (1) There is a state property tax assistance account
in the state special revenue fund established in 17-2-102 to the credit of the department of revenue. The
revenue allocated to the account must be used to provide property tax assistance.
(2) The department shall use money in the account to provide rebates pursuant to [section 10].
Section 23. Codification instruction. (1) [Sections 1 through 7] are intended to be codified as an
integral part of Title 15, chapter 6, and the provisions of Title 15, chapter 6, apply to [sections 1 through 7].
(2) [Section 8] is intended to be codified as an integral part of Title 15, chapter 1, part 1, and the
provisions of Title 15, chapter 1, part 1, apply to [section 8].
(3) [Sections 9 through 11] are intended to be codified as an integral part of Title 15, chapter 1,
and the provisions of Title 15, chapter 1, apply to [sections 9 through 11].
(4) [Section 22] is intended to be codified as an integral part of Title 15, chapter 1, and the
provisions of Title 15, chapter 1, apply to [section 22].
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Section 24. Effective dates -- contingency. (1) Except as provided in subsections (2) and (3), [this
act] is effective on passage and approval.
(2) [Sections 1 through 6, 13, and 15 through 20] are effective January 1, 2026.
(3) [Sections 8 and 12] are effective on the date that the department of revenue certifies to the
code commissioner that a court of final disposition finds that [section 7] is invalid. The department of revenue
shall submit certification within 30 days of the occurrence of the contingency.
Section 25. Transfer of funds. The state treasurer shall transfer $90 million from the general fund to
the property tax assistance account provided for in [section 22] by July 1, 2025.
Section 26. Severability. If a part of [this act] is invalid, all valid parts that are severable from the
invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in
effect in all valid applications that are severable from the invalid applications.
Section 27. Coordination instruction. If both Senate Bill No. 542 and [this act] are passed and
approved, then [sections 1 through 23 and 25, 33, and 34 of this act] are void and [section 14 of Senate Bill No.
542] must be amended as follows:
"15-6-134. Class four property -- description -- taxable percentage. (1) Class four property
includes:
(a) subject to subsection (1)(e), all land, except that specifically included in another class;
(b) subject to subsection (1)(e):
(i) all improvements, including single-family residences, trailers, manufactured homes, or mobile
homes used as a residence, except those specifically included in another class;
(ii) appurtenant improvements to the residences, including the parcels of land upon which the
residences are located and any leasehold improvements;
(iii) vacant residential lots; and
(iv) rental multifamily dwelling units.
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(c) all improvements on land that is eligible for valuation, assessment, and taxation as agricultural
land under 15-7-202, including;
(d) 1 acre of real property beneath residential improvements on land described in 15-6-133(1)(c).
The 1 acre must be valued at market value.
(d) and 1 acre of real property beneath an improvement used as a residence on land eligible for
valuation, assessment, and taxation as forest land under 15-6-143. The 1 acre must be valued at market value.
(e) real property beneath commercial improvements and as much of the surrounding land that is
reasonably required to support the commercial improvements on land described in 15-6-133(1)(c) and real
property beneath commercial improvements and as much of the surrounding land that is reasonably required to
support the commercial improvements on land eligible for valuation, assessment, and taxation as forest land
under 15-6-143. The land must be valued at market value.
(e)(f) all commercial and industrial property, as defined in 15-1-101, and including:
(i) all commercial and industrial property that is used or owned by an individual, a business, a
trade, a corporation, a limited liability company, or a partnership and that is used primarily for the production of
income;
(ii) all golf courses, including land and improvements actually and necessarily used for that
purpose, that consist of at least nine holes and not less than 700 lineal yards;
(iii) commercial buildings and parcels of land upon which the buildings are situated; and
(iv) vacant commercial lots.
(2) If a property includes both residential and commercial uses, the property is classified and
appraised as follows:
(a) the land use with the highest percentage of total value is the use that is assigned to the
property; and
(b) the improvements are apportioned according to the use of the improvements.
(3) (a) Except as provided in 15-24-1402, 15-24-1501, 15-24-1502, and subsection (3)(b), class
four residential property described in subsections (1)(a) through (1)(d) of this section is taxed at 1.35% of
market value a graduated rate as follows:
(i) 0.76% for the first $400,000 of market value;
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(ii) 1.1% for the market value that is greater than $400,000 and up to $1.5 million; and
(iii) 2.2% for the market value that is greater than $1.5 million.
(b) The tax rate for the portion of the market value of a single-family residential dwelling in excess
of $1.5 million is the residential property tax rate in subsection (3)(a) multiplied by 1.4.
(b) The maximum graduated rate for multifamily dwelling units described in subsection (1)(b)(iv)
with a market value of greater than $2 million is 1.89%.
(c)(4) (a)The Except as provided in subsection (4)(c), the tax rate for commercial and industrial
property is the residential property tax rate in subsection (3)(a) multiplied by 1.4 described in subsections (1)(e)
and (1)(f) in excess of $400,000 is 1.89%.
(b) The tax rate for the first $400,000 of market value for commercial and industrial property is
1.4%.
(4)(c) Property described in subsection (1)(e)(ii) (1)(f)(ii) is taxed at one-half the tax rate established
in subsection (3)(c) (4)."
Section 28. Coordination instruction. If Senate Bill No. 542, House Bill No. 863, and [this act] are
passed and approved, then the section in House Bill No. 863 that coordinates with [this act] is void.
Section 29. Coordination instruction. If both Senate Bill No. 542 and [this act] are passed and
approved, then [sections 1 through 23 and 25 of this act] are void and [section 4 of Senate Bill No. 542] must be
amended as follows:
Section 4. Legislative findings -- local government charters and fixed mill levy limits
superseded. (1) (a) The legislature finds that most local governments set mill levies that adjust downward
when taxable value increases under 15-10-420. This floating mill levy concept automatically lowers the number
of mills levied against a taxpayer when property values increase, which mitigates increases in property values.
However, when mill levies are fixed, the opposite occurs when property values increase, and property taxes are
not automatically mitigated for taxpayers that are levied based on a fixed mill levy.
(b) The legislature finds further that it is prohibited under Article VIII, section 2, of the Montana
constitution, from suspending or contracting away the power to tax. The legislature also recognizes and
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respects the power of local governments under Article XI, section 5, of the Montana constitution to adopt,
amend, revise, or abandon a charter.
(2) As a matter of policy, the legislature intends to supersede local government charters that fix mill
levy limits for the limited purpose of exercising the power to tax while also maintaining local government
revenue sources without raising taxes on residential taxpayers. Having considered all options on a statewide
basis, the legislature finds the statutory structure of the property tax has evolved significantly since the passage
of Initiative Measure No. 105 on November 4, 1986, and the enactment of 15-10-420 by the legislature in 1999.
Given the significant change in the structure of the property tax and the rising cost of residential property in the
last 5 years, there is a compelling interest to all the citizens of the state to lower residential property tax rates
for primary residences, which can only be accomplished by this section and 15-10-420.
(3) A local government with a charter form of government that includes a mill levy limit of a specific
number of mills that may be imposed in the charter shall levy the number of mills in fiscal year 2026 and
subsequent tax years that will generate the amount of property taxes assessed in fiscal year 2025, without
amending or revising the charter. In fiscal years after 2026, the local government shall may levy an amount not
to exceed the number of mills levied in fiscal year 2026.
(4) A taxing entity with a local mill levy limit of a specific number of mills that may be imposed that
was authorized by the voters before [the effective date of this section], shall:
(a) elect to transition a voted mill levy to a dollar-based mill levy equal to the amount of property
taxes assessed in fiscal year 2025 and thereafter subject to the provisions of 15-10-420(1)(a); or
(b) levy the number of mills in fiscal year 2026 that will generate the amount of property taxes
assessed in fiscal year 2025. In fiscal years after 2026, the local government shall may levy an amount not to
exceed the number of mills levied in fiscal year 2026."
Section 30. Appropriation. (1) There is appropriated $500,000 from the general fund to the
department of revenue for the fiscal year ending June 30, 2025, to implement [this act]. The legislature intends
this to be an addition to the “Property Tax Revision Implementation" appropriation in House Bill No. 2.
(2) There is appropriated $3.5 million from the general fund to the department of revenue for the
fiscal year ending June 30, 2026, to implement [this act]. The legislature intends this to be an addition to the
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“Property Tax Revision Implementation" appropriation in House Bill No. 2.
Section 31. Coordination instruction. If Senate Bill No. 542 and [this act] are both passed and
approved, then [sections 1 through 23, 25, and 30 of this act] are void and Senate Bill No. 542 must be
amended to include a new section that reads:
Section 32. Appropriation. (1) There is appropriated $500,000 from the general fund to the
department of revenue for the fiscal year ending June 30, 2025, to implement [this act]. The legislature intends
this to be an addition to the “Property Tax Revision Implementation" appropriation in House Bill No. 2.
(2) There is appropriated $3.5 million from the general fund to the department of revenue for the
fiscal year ending June 30, 2026, to implement [this act]. The legislature intends this to be an addition to the
“Property Tax Revision Implementation" appropriation in House Bill No. 2."
Section 32. Applicability -- retroactive applicability. (1) Except as provided in subsection (2), [this
act] applies retroactively to property tax years beginning after December 31, 2024.
(2) [Sections 1 through 6, 13, and 15 through 20] apply to property tax years beginning after
December 31, 2025.
Section 33. Termination. (1) [Section 14] terminates December 31, 2025.
(2) [Sections 9 through 11 and 21] terminate June 30, 2026.
Section 34. Contingent termination. [Sections 8 and 12] terminate on the date that the department
of revenue certifies to the code commissioner that reimbursements authorized pursuant to [section 8] have
been completed. The department of revenue shall submit certification within 30 days of the occurrence of the
contingency.
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I hereby certify that the within bill,
HB 231, originated in the House.
___________________________________________
Chief Clerk of the House
___________________________________________
Speaker of the House
Signed this _______________________________day
of____________________________________, 2025.
___________________________________________
President of the Senate
Signed this _______________________________day
of____________________________________, 2025.
HOUSE BILL NO. 231
INTRODUCED BY L. JONES, B. LER, S. ESSMANN, R. MINER, W. MCKAMEY, D. FERN, J. KASSMIER, M.
BERTOGLIO, C. SPRUNGER, S. MORIGEAU, G. HUNTER, C. COCHRAN, S. FITZPATRICK, M.
NIKOLAKAKOS, G. HERTZ, C. SCHOMER, E. TILLEMAN, R. TEMPEL, J. DARLING, G. PARRY, K. WALSH,
G. NIKOLAKAKOS, B. BARKER, M. CUFFE, T. MCGILLVRAY, B. GILLESPIE, D. BEDEY
AN ACT GENERALLY REVISING PROPERTY TAX LAWS; PROVIDING FOR A PROPERTY TAX REBATE ON
A PRINCIPAL RESIDENCE BASED ON A CERTAIN AMOUNT OF PROPERTY TAXES PAID FOR TAX YEAR
2024; TEMPORARILY REDUCING CLASS FOUR RESIDENTIAL PROPERTY TAX RATES; REVISING TAX
RATES FOR CERTAIN CLASS FOUR RESIDENTIAL AND COMMERCIAL PROPERTY; PROVIDING A
LOWER TAX RATE FOR CERTAIN OWNER-OCCUPIED RESIDENTIAL PROPERTY AND LONG-TERM
RENTALS; PROVIDING A LOWER TAX RATE FOR A PORTION OF COMMERCIAL PROPERTY VALUE;
PROVIDING ELIGIBILITY AND APPLICATION REQUIREMENTS; PROVIDING FOR AN APPEAL PROCESS;
PROVIDING FOR THE ADJUSTMENT OF CERTAIN LOCAL GOVERNMENT FIXED MILL LEVIES;
PROVIDING APPROPRIATIONS; PROVIDING DEFINITIONS; PROVIDING RULEMAKING AUTHORITY;
AMENDING SECTIONS 15-1-121, 15-6-134, 15-7-102, 15-15-101, 15-15-102, 15-15-103, 15-16-101, 15-17-
125, AND 15-30-2120, MCA; AND PROVIDING EFFECTIVE DATES, APPLICABILITY DATES, AND
TERMINATION DATES.