Montana’s New 2026 Property Tax Structure

Summary: If you’ve owned property in Montana for more than a few years, you’ve likely noticed a shift. Not just in the pace of growth or the price of homes, but in your tax bill. 

In a state where wide-open spaces meet rapid development, property taxes are becoming a hot topic. And with new changes on the horizon in 2026, it’s worth understanding exactly how the system works, why bills don’t always move in lockstep with property values, and what’s changing for homeowners and investors.

How Montana Property Taxes Work

Montana’s property tax system is more complex than it first appears. Here’s how it breaks down:

1. Appraisal – Every two years, the Montana Department of Revenue reappraises residential, commercial, agricultural, and industrial property values. These values are based on what similar properties have sold for in recent years.

2. Tax Rate by Property Class – The Montana Legislature assigns different rates to property classes. Since 2018, residential property has been taxed at 1.35% of its market value and commercial property at 1.89%. This rate is applied to your property’s appraised value to determine its taxable value.

3. Mill Levies – Local governments (counties, cities, and school districts) then apply mill levies to that taxable value. A mill is $1 per $1,000 of taxable value. Mill levies fund services like schools, roads, fire, police, and local government. They shift from year to year depending on budgets.

The key point: you are not taxed directly on your home’s value, but on its taxable value multiplied by the local mill levies. This is why even if your property value decreases, your taxes don’t always fall at the same rate — if local governments need the same revenue, mill levies can rise.

Recent Trends: 2023 and 2025 Reappraisals

In 2023, many Montana homeowners saw staggering increases in appraised values, a 45% median rise statewide, reflecting the rapid pandemic-era surge. This translated into higher tax bills, though not always as high as homeowners feared, thanks to adjustments in rates and mill levies. The state also issued a one-time rebate for qualifying residents to soften the blow.

By 2025, appraised values have generally come down slightly, meaning most property owners are seeing valuations lower than their 2023 notices. However, because mill levies are applied to maintain local revenue, a lower appraised value doesn’t always equal a proportionally lower tax bill.

What’s Changing in 2026

The bigger story is what’s ahead. Starting in 2026, Montana will overhaul its property tax system, shifting more of the burden onto second homes and short-term rentals while easing it for full-time residents and long-term rentals.

Tiered Rates for Primary Homes & Long-Term Rentals

If your property is your primary residence (you live there at least 7 months of the year) or a qualifying long-term rental (rented for at least 7 months annually on a monthly basis), it will qualify for new “homestead” tax rates: 

These rates apply to the taxable value before mill levies are added. Projections suggest this structure will reduce property taxes for owner-occupied homes by about 18% (on average over two years).

Flat Rate for Second Homes & Short-Term Rentals

Properties that do not qualify as a primary residence or long-term rental — second homes, vacation properties, and short-term rentals (Airbnb/VRBO units), will be taxed at a flat 1.9% of full assessed value beginning in 2026. For many of these owners, that means a 60–68% cumulative increase by 2026.

How to Qualify

Homestead (principal residences) and long-term rental owners need to be enrolled to be considered for the reduced tax rate. 

• For homeowners: enroll online or fill out the application provided here. 

• For landlords: follow the instructions here to enroll

If you claimed a property tax rebate in 2025, you should be automatically enrolled. You can verify your enrolment here. 

What It Means for Montanans

• Homeowners – Full-time residents stand to benefit from reduced rates, though mill levies will continue to influence final bills.

• Long-Term Rental Owners – Properties providing year-round housing will also qualify for the tiered rates, supporting housing stability.

• Second Homes & Short-Term Rentals – Investors and part-time residents will shoulder more of the tax burden starting in 2026.

Ultimately, the changes are designed to ease the strain on Montana residents while shifting responsibility toward investment and vacation-use properties.

What To Do If You Disagree With Your Appraisal

If you believe your home was incorrectly valued:

1. Check your property information on the Department of Revenue website.

2. Contact the department at 406-582-3400 or dorpadbozeman@mt.gov with questions.

3. Submit a Request for Informal Review (Form AB-26) through mtrevenue.gov if needed. Supporting documents may include a recent purchase price, fee appraisal, comparable sales, or builders cost breakdown.

Bottom Line

Montana’s property tax system is entering a period of transition. While rising values in recent years have pushed tax bills upward, the 2026 changes promise relief for primary homeowners and long-term landlords — while asking more from second-home owners and short-term rental investors.

Understanding how appraisals, rates, and mill levies all work together is the best way to anticipate your tax bill — and plan ahead.