• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Soaring property values

There are many reasons why property taxes may increase over time. First and foremost, property tax is typically based on a percentage of a home’s assessed value — so if your value goes up, it’s likely that your tax bill will too.

In Kurt’s case, he claims to have bought his property in 1995. In the 29 years since then, the family home (he does not share where in Montana the property is located) has undoubtedly increased in value.

According to FRED Economic Data’s house price index for Billings, MT (the state’s most populous city), the average house price at the end of 1995 was around $103,860 and by the end of 2023 it had soared around 272% to more than $387,000.

Looking at the data since 1985, the steepest jump in value in Billings and elsewhere in the state occurred between 2021 and 2023 — during and after the COVID-19 pandemic, when there was a surge of migration to the state and housing demand quickly outpaced supply. This corresponds with Kurt’s complaint that his property taxes have soared “over the last couple of years,” which likely occurred because his property value increased.

Instead of working deep into what should be his retirement years, Kurt could sell the family home, collect his capital gains and move somewhere smaller (and with a more manageable tax bill) — but the house holds too much sentimental value for him to consider that.

“My children were raised [there]. They want to get married there, and I plan on being there until the very end,” he says — even if that means taking winter and summer shifts.

Other homeowners in Montana, who aren’t quite so attached to their properties, may see selling and moving as their only viable option. According to a Montana Free Press (MTFP) analysis of revenue department data for the 956,000 properties on the state’s property tax rolls in both 2022 and 2023, the median Montana residential property owner saw a 21% hike on their property taxes this year, with typical increases ranging between 11% and 35%. That translates into residential tax bills that will be $98 to $660 a year more.

Stop overpaying for home insurance

Home insurance is an essential expense – one that can often be pricey. You can lower your monthly recurring expenses by finding a more economical alternative for home insurance.

Officialhomeinsurance can help you do just that. Their online marketplace of vetted home insurance providers allows you to quickly shop around for rates from the country’s top insurance companies, and ensure you’re paying the lowest price possible for your home insurance.

Explore better rates

Where do the taxes go?

Property taxes make up almost 97% of local tax revenue here, considerably more than the 71% share for local governments in all U.S. states together, according to a state legislature brief. Property taxes account for 9.9% of the tax revenue of the Montana state government, as opposed to 1.7% for all the state governments.

Montana's great reliance on property taxes is possibly due to the comparatively lower tax revenue from sales and excise taxes. Montana has no state or local sales tax.

Property taxes are calculated by multiplying the property’s market value by its tax rate (1.35% for residential properties) and its mill levies (one mill generates $1 for each $1,000 in taxable value). For example, for a property worth $400,000 with a tax rate of 1.35% and a mill rate of 650, the property tax would be $3,510.

Almost all property taxes in Montana go towards county and city government services like K-12 schools, law enforcement and fire departments. This money does not typically go towards state services, like universities and prisons, which are funded by state income tax.

As inflation has increased nationwide, this has not only driven up the cost of living, but it also inflated the costs of providing public services. As a result, some local governments have had to compensate by raising property tax rates.

There’s no easy fix to Montanans’ property tax nightmares. The state department of revenue has promised property tax rebates for the 2022 and 2023 tax years of up to $675 for eligible homeowners, using $350 million from the state’s budget surplus.

While that may help some cash-strapped Montana homeowners, the “moratorium” on taxes that Chuck so desperately wants remains highly unlikely.

Sponsored

This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.