There are a few things in life less fun than paying property taxes. Add a brand-new tax rate calculation system and reassessment, and now it’s even more confusing. Welcome to 2025 in Montana.
At SterlingCRE Advisors, we’ve been tracking the upcoming changes. We’ve reviewed the legislation and spoken with local tax experts, and we’re here to help break it all down for you. Don’t be caught off guard when those property tax bills start rolling in.
Renters, Pay Attention
If you’re a tenant, you might be thinking: “This does not apply to me.” But, most commercial leases pass property taxes through to tenants. Therefore, even if you don’t own the building, these changes will still impact your bottom line. Everyone with a lease needs to understand what may be coming.
What’s Changing: A Three-Part Equation
Three main components determine property tax bills:
- Your property’s assessed value
- The tax rate applied to that value
- The local mill levy (or “mills”) set to fund community budgets
1. Updated Valuations
The state reassessed property values in 2024. These will be used to calculate 2025 taxes. If you own commercial property in markets like Bozeman or Missoula, you’ll likely see an increase in your assessed value. Even with the slower sales market, sales prices and lease rates have continued to increase, albeit at a slower pace than in 2022.
2. New Tiered Tax Rates
This is where things get interesting. The tax rate determines how the tax burden is shared among different classes of property owners. Classes of property include residential, commercial, agricultural land and others. For a complete list, follow this link.
In 2025, Montana is implementing a tiered tax rate for commercial property owners:
- 1.4% on the first $400,000 of a property’s value
- 1.89% on any value above $400,000 (1.89% is the same rate you paid in 2024, only it applied to the entire property value)
So, if you own a lower-valued property, you’ll see a tax rate decrease. Higher-valued property owners will see a more minor decrease in their tax rate.
In 2026, the system changes again:
The cutoff for rates shifts to six times the median commercial property value (we don’t yet know what that median value will be).
- Property value below that threshold will be taxed at 1.5%
- Value above it will be taxed at 1.9%
Unfortunately, the state is still finalizing the details of how the 2026 tax rates will work, and there are several unanswered questions. We anticipate more clarity in the coming months, so please keep an eye out for further details.
What About Multi-Family Owners?
If you own a small multi-family property (with fewer than five units) and rent it long-term, you could qualify for a 1.1% residential tax rate in 2026. You’ll need to be certified for long-term rentals. No certification? The state assumes you’re a short-term rental, and you’ll pay a higher rate.
If you own a larger multi-family property (five or more units), you’ll be taxed under the commercial structure detailed above. You won’t qualify for the reduced residential rate—at least for now. There’s still some uncertainty, but this is unlikely to change.
3. Don’t Forget the Mills
Lastly, don’t overlook mill levies—the wild card in your property tax bill.
Mills are set locally to meet budget needs. So even if your property value or rate goes down, a higher mill levy could still increase your tax bill. Conversely, even with a value increase, your taxes could drop if mills decrease. This piece isn’t finalized until later in the year, which means…
No one can tell you exactly what your 2025 bill will be at this time.
Final Thoughts
As much as we wish we had a crystal ball, property taxes in 2025 and 2026 are riding a wave of change. If you’re planning to sell, buy, or adjust your portfolio, now is the time to run a few “what-if” scenarios and consider the potential implications.
At SterlingCRE Advisors, we’re here to walk you through it. We can help interpret your reassessment notice or review a property’s tax exposure before buying or selling. Let’s make sure you’re prepared—not surprised.
Disclaimer: The information provided herein is for general informational purposes only and does not constitute legal, financial, or tax advice. Please consult your tax advisor or financial professional regarding your specific situation.
