In late July, a month later than usual, Jefferson County homeowners will receive a mailing that most have been dreading for two years — a property value reassessment by Montana’s Department of Revenue (DOR).
It won’t be pretty: preliminary estimates from DOR indicate that the median home value in the county will go up 14.5% — significantly less than the shocking 51% increase in 2023, but still a significant jump, fueled by rising home prices here and across the state.
But this time, the outcome will be different. Two property tax relief bills, House Bill 231 and Senate Bill 542, engineered in a chaotic session-end burst by the 2025 Legislature and signed into law last month by Gov. Greg Gianforte, promise to restructure Montana property taxes.
“It’s not simple to explain to taxpayers,” says County Treasurer Terri Kunz. Basically, if your property is your principal residence — that is, you live there at least seven months of the year — your property taxes should go down. Preliminary DOR data suggests that the median Jefferson County homeowner will see a 19% drop in their tax bill by fiscal 2026, even including the higher assessment. Owners of long-term rental properties should enjoy a similar decrease.
In the end, “you’re not going to see much of a change with respect to what [counties and cities] get for their general fund revenues,” said Kelly Lynch, executive director of the Montana League of Cities and Towns. “What will happen is the increase will shift to the other classes of properties.”
The size of your break will depend on the value of your home. Under existing law, the taxable value — the figure to which local and state mill rates are applied — of homes worth less than $1.5 million is calculated at a flat rate of 1.35 percent. In fiscal 2026, that rate will go down to 0.76% for homes below the state’s median value (currently estimated at $395,000), so those owners should realize the biggest proportional benefit. The rate will decrease to 0.9 percent for homes up to twice the median value; and 1.1 percent for those two to four times the median.
For owners of the most expensive residences, however, the taxable value rate will increase to 1.9 percent, so their taxes should go up. Owners of second homes also will face the 1.9 percent rate, regardless of the property’s value. In Jefferson County, according to DOR estimates, owners of second homes will pay about 81 percent more in taxes in fiscal 2026 than they do now. Second homes on agricultural land will see a more modest increase.
These changes differ for property owners in other counties: In Lake County, for example, taxes on primary residences are estimated to go down by 25% over two years, and the tax bill for second homes should increase by just 58%. In Madison County, owners of second homes will see just a 44% increase, according to the DOR data.
That’s because, compared to the statewide average (and to Lake and Madison Counties), second homes and short-term rentals account for a smaller share of Jefferson County’s tax base. It also has fewer commercial and industrial properties, whose rates likewise will go up with the new laws.
Because it correspondingly has more primary residences for which the state’s lower tax rate will apply, the county will have to compensate by raising its mill rate for everyone in order to collect the same tax revenue as in fiscal 2024.
Like all municipal governments in Montana, the county’s rate is not fixed: It apportions its budget across taxpayers in all categories, based on taxable value. So even though the county is limited by law to increasing its budget each year by half the rate of inflation, it will have to raise mill rates if overall taxable value goes down, just to keep pace. The DOR estimates indicate that, for residential properties as a whole, the county will raise the rate from 482 mills in the current fiscal year to 540 in 2026.
As a result, primary home owners will still enjoy lower taxes than before – but the decrease will probably be less than the statewide average for similar properties. Also, owners of second homes and primary residences valued at over $1.5 million will likely see bigger tax increases, in percentage terms, than in other counties.
For example, a primary residence assessed at $300,000 would have a taxable value today of $4,050, and the owner would pay annual taxes of $1,952. In fiscal 2026, given the lower 0.76% rate but a 15% assessment increase, that home’s taxable value would be $2,622. At the county’s 540 mill rate, the resulting annual tax bill in 2026 would be $1,415. All told, property taxes on that residence would fall by more than 25 percent.
Though the changes will be significant for many property owners, Kunz describes the introduction of the new system as “a mess.” “I think there are probably better ways to do this,” she said.
Tax assessment notices were supposed to have been mailed out this month, and the delay means the state will miss the statutory Aug. 4 deadline for assessment appeals. As a result, counties won’t get the final, certified values until the end of August or early September – which in turn could delay the calculation of local mill levies and the production of tax bills. “We’re very concerned about DOR’s ability to do everything it has to in order for us to have time to certify our mills,” said Lynch, referring to her members.
State Senator Becky Beard, who sits on the Legislature’s Revenue Interim Committee, says the DOR similarly has been scrambling to implement the changes mandated by the new tax bills. It is in the process of hiring 41 new employees, she said, in part to accommodate the multiple tax rates within property classes.
Once the combined effects of the new assessments and the new tax rates are clear, Kunz plans to hold a public meeting to describe the changes and field questions. “All these tiers are going to complicate the process,” she says. “I want this to be easy, and I want people not to go broke. How do we do that?”
