California Residents Most Impacted by Montana's Property Tax Change

Newsweek

21-05-2025

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Californians who own properties in Montana stand to shoulder a heavier tax burden as a result of a new bill which will increase property taxes on second homes in the state, while offering relief to primary residence's owners and long-term rentals.
Why It Matters
The mass influx of wealthy Californians buying property in nearby states during the pandemic boom, including in Arizona and Colorado, has been pointed at as one of the main reasons behind the massive surge in home prices in these markets.
In Montana, the median sale price of a home was $529,000 last month, according to Redfin data, up nearly 58 percent from April 2020, when it was a much more modest $303,900.
A significant part of this surge was driven by out-of-state buyers, especially from coastal areas like California, who bought second homes in scenic parts of the state. In 2021, second-home purchases accounted for up to 20 percent of all home sales statewide, Realtor.com data show.
New homes sit waiting to be moved to a new location just north of Culbertson, Montana, on September 19, 2013.
New homes sit waiting to be moved to a new location just north of Culbertson, Montana, on September 19, 2013.
Ken Cedeno/Corbis via Getty Images
While Californians collectively own the equivalent of more than 5 percent of Montana's taxable real estate market—for a total of over $9.5 billion in Montana residential property—they are currently responsible for only 3.54 percent of the state's property tax revenue, Realtor.com reported. Montana residents, on the other hand, own around 77 percent of the state's taxable residential real estate, but pay 84 percent of total property taxes.
The new bill is likely to correct this mismatch, forcing owners of second homes in the state to pay higher taxes.
What To Know
Earlier this month, Montana lawmakers passed a two-bill package which significantly cut property taxes for homeowners on their primary residences, shifting the burden on owners of second homes in the state. The bills had the strong backing of Republican Governor Greg Gianforte, who has made it a point to deliver property tax relief to Montanans struggling with the rising cost of homeownership.
State Representative Llew Jones, a Republican of Conrad who developed the Gianforte-backed package, said that the legislation will translate to significant property tax cuts for owner-occupied homes and long-term rentals, with a home valued at $360,000 paying an average $719 less in taxes next year.
While supporters say that the bills will bring back balance to the Montana property tax system, critics are concerned that the measures will hit business properties and resident-owned second homes who are already struggling with higher costs. The package already includes lower rates for lower-value commercial properties to help protect small businesses in the state.
With the new changes, the tax rate for primary residences and long-term rentals valued at or below the state's median home price (which is around $340,000) will drop to 0.76 percent.
Primary residences and long-term rentals worth more will be taxed 0.76 percent of their full value on the first $340,000 and up to 1.9 percent on any value over four times the median.
All residential properties that are not considered primary residences or long-term rentals—second homes and short-term rentals like Airbnb, for example—will face higher property taxes this year.
For Californians who own second homes in Montana, this could mean much higher property tax bills. Their properties, under the new legislation, will be taxed at a flat 1.9 percent on their full value.
What People Are Saying
Governor Greg Gianforte wrote on X, formerly Twitter, in late April after the approval of the package: "In the last election, Montanans spoke loud and clear: property taxes are too high and must be reined in. I'd like to thank the hardworking members of the Montana State Legislature who voted for meaningful and permanent property tax relief this session."
Montana Republican Senator Greg Hertz said of the two-bill package in a statement to KGVO.com: "We did finally pass House Bill 231, and it works in conjunction with Senate Bill 542. I did not support either one of those. I don't believe what we've done with property taxes is a fix. It's merely a shift from having one taxpayer pay more to provide relief to another taxpayer."
Montana Democratic Representative Mark Thane told KGVO.com: "I think people will be very pleased to see again, in year one, a significant reduction on their property tax bill and a $400 rebate on top of that."
He added: "I think in year two, if you're an individual that owns a second home, part of the rate reduction that will be experienced by those Montanans that have a single home for primary residence is funded by the higher tax rates that you'll find on second homes, but the vast majority of Montana will see significant property tax relief for their residential properties."
Manish Bhatt, senior policy analyst at the Tax Foundation, told Realtor.com: "Tax shifts are not tax reform. They're just moving the pot of money that you're taking from one pocket to the other."
He added a warning, saying luxury neighborhoods might end up benefiting the most from these changes, seeing revenues for local governments increase while they might fall in less wealthy areas: "What ends up happening here is, as property values surge, it could be a real windfall for local governments. But shifting the burden from certain classes of property to others could have a real distortionary effect in the market."
What Happens Next
Montana's groundbreaking measure is likely to offer significant relief to full-time residents, but comes with some risk—including weakening demand in the state's second-home market. The package's full impact on the state will only become clear in the long term.
Are you a Californian who owns a second home in Montana? We'd like to hear from you. Contact [e-mail].