Montana is at a crossroads when it comes to property taxation. With the cost of living on the rise and housing markets shifting rapidly, the state’s lawmakers are considering reforms that could bring long-term changes to how property taxes are distributed. Two proposals—House Bill 231 and House Bill 154—aim to provide relief to full-time residents while revisiting the role that second homes and short-term rentals play in the state’s economy and infrastructure.
A Rising Tide of Property Taxes
Across the U.S., property tax bills have surged in recent years. According to Redfin, cities like Indianapolis, Atlanta, and Tampa have all seen property tax increases of 60% or more between 2019 and 2024. Montana hasn’t been immune to these trends, and for many residents, the rising costs are becoming increasingly difficult to manage—especially in areas where wages haven’t kept pace with housing inflation.
The Case for HB 231
House Bill 231, introduced by Rep. Llew Jones, seeks to reduce property taxes by 17% for owner-occupied homes across Montana. This would apply to roughly 230,000 households. The bill also proposes a corresponding tax increase—around 53%—on secondary properties, including vacation homes and short-term rentals.
Supporters argue this adjustment would place more of the tax responsibility on non-primary homeowners, many of whom are out-of-state investors. This approach is seen by some as a step toward ensuring that full-time residents, who use public services year-round, are not disproportionately burdened by rising tax bills.
The Influence of Second Homes
During the pandemic, Montana experienced a sharp uptick in second-home purchases. At one point in 2021, 20% of home sales were for secondary residences. While that figure has since decreased, the lingering effects remain. Communities have seen housing costs rise, and rental markets have tightened. From a policy perspective, HB 231 appears to be a response to this trend—aiming to recalibrate the system in favor of those who live and work in the state year-round.
A Broader Affordability Strategy: HB 154
House Bill 154, sponsored by Rep. Jonathan Karlen, takes a different angle—focusing on income-based relief. The bill would create a “housing fairness” income tax credit for renters and homeowners earning up to $150,000 annually. Combined with HB 231, this proposal could offer a broader affordability package to both homeowners and tenants.
Critics may argue that adjusting tax burdens could discourage outside investment or create complications in the housing market. However, proponents suggest that these changes are essential for long-term sustainability—particularly in preserving affordability for working families and stabilizing local economies.
What This Could Mean for Montana
Both bills are currently being reviewed by the Montana Senate Taxation Committee. If passed, they would represent a shift in how the state approaches residential taxation—one that more closely ties property tax obligations to how properties are used and who benefits most from public services.
Whether these reforms are the right long-term solution remains to be seen. But they do raise important questions about fairness, equity, and the future of housing in Montana. For now, the conversation is a valuable one – and it comes at a time when many are looking for meaningful answers to the growing cost of living.
