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Property Tax Reappraisal

To download our Exploring and Understanding Property Tax brochure, which describes property reappraisal, click here.

In 1975, the legislature required the Department of Revenue to administer and supervise a program for the revaluation of taxable property on a cyclical reappraisal cycle every five years. Revaluations - more commonly called reappraisal cycles - are designed to insure that all property is taxed on current structural, market and income information. (15-7-111, MCA)

Since that time, Montana has completed reappraisals in 1985, 1992, 1997 and 2003. The reappraisal of all property in the state is the Montana Department of Revenue's largest and most difficult undertaking.  It involves more than 800,000 individual parcels of property, including:

Residential Improved = 527,700 parcels
Commercial Improved = 63,705 parcels
Agricultural Improved = 66,915 parcels
Industrial = 1,065 parcels
Agricultural Land = More than 50 million acres
Forest Land = 3.95 million acres

All taxable property contained in classes three, four and ten is reappraised.  Class three property includes agricultural land and non-qualified agricultural land (20 to 160 acres).  Class four includes residential, commercial, and industrial land and improvements, and improvements on agricultural and forestland.  Class 10 includes forestland.

Property owners in the affected classes are impacted by the results of the reappraisal.  Local governments, which use property tax as a revenue source, are also be impacted.

Over the years, the Montana Legislature has enacted several laws to mitigate the effects of value increases due to these reappraisals. This includes implementing a "phase-in" of value, creating a partial exemption and reducing the tax rate.

2003 Law Changes to Mitigate Reappraisal Effects

Senate Bill 461 was passed by the 2003 Montana Legislature to mitigate reappraisal effects.

  • Analysis indicates that the 2003 reappraisal cycle will increase residential class 4 property value overall by 21.4%, commercial class 4 property value overall by 23.2%, and class 3 agricultural land value overall by 15.3%.
  • Prior to Senate Bill 461, statute required that an increase in assessed value be phased in over a 6-year period; the tax rate remains constant at 3.46%; the exemption for residential class 4 property remains at 31%; and the commercial class 4 exemption remains at 13%.
  • Senate Bill 461 retains the 6-year phase-in of reappraisal values, with the 2003 reappraisal being phased in over 6 years. An example of the phase-in is as follows:

    (Reappraisal Value - Value before Reappraisal) X .1667 = Phase-in Amount
    Value before Reappraisal + Phase-in Amount = Phase-in Value

$200,000 - $170,000 = $30,000 X .1667 = $5,001
$170,000 + $5,001 = $175,001

  • Senate Bill 461 further mitigates the effects of reappraisal by increasing exemption amounts for residential and commercial class 4, while reducing the tax rate on class 3 and 4 property from 3.46% to 3.01% over a 6-year period.

The reduced tax rate for Class 3 and 4 property is shown in the following schedule:

Tax Year    Tax Rate
  2003           3.40%
  2004           3.30%
  2005           3.22%
  2006           3.14%
  2007           3.07%
  2008           3.01%

The "homestead" and "comstead" exemptions that exempt a portion of the Phase-in value of Class 4 residential and commercial properties from taxation are shown in the following schedule:

Tax Year    Residential   Commercial
                    Exemption    Exemption
  2003            31.0%          13.0%
  2004            31.4%          13.3%
  2005            32.0%          13.8%
  2006            32.6%          14.2%
  2007            33.2%          14.6%
  2008            34.0%          15.0%

  • Senate Bill 461 allows additional property tax assistance for owners who meet certain property tax increases and income requirements.  Residential properties that have an increase in taxable value of at least 24%, and a tax liability increase of $250 or more, are eligible for the additional tax assistance if household income is below $75,000.  Under the income requirements set in the bill, the following taxable value caps apply:
    • If the household income of the eligible residence is less than $25,000 per year, the taxable value increase is capped at 24% over 6 years.
    • If the household income of the eligible residence is between $25,000 and $50,000 per year, the taxable value increase is capped at 30% over 6 years.
    • If the household income of the eligible residence is between $50,000 and $75,000 per year, the taxable value increase is capped at 36% over 6 years.
  • Senate Bill 461 is effective upon passage and applies to tax year 2003.

Study Committees Related to Property Reappraisal

The 2003 Montana Legislature, in Senate Bill 461 and House Bill 429, authorized three interim committees to study specific tax issues facing Montana.

Property Tax Reappraisal Study Committee
The committee is to study the effects of cyclical reappraisal and methods for mitigating the changes in taxable value caused by cyclical reappraisal.

Tax Reform Study Committee
The committee is to study tax reform that may include revising the existing tax structure and considering alternative forms of taxation. The purpose of the committee is to conduct a comprehensive examination of taxation in Montana.  The committee shall develop an inventory of taxes imposed at the state and local level, provide analysis that evaluates existing taxes, examine tax expenditures to assess the ongoing merit of each expenditure, and examine alternative methods of taxation from existing sources as well as from new sources of revenue.

Both of these committees are required to submit written reports to the Montana Legislature not later than December 1, 2004.  The report will include recommendations and proposed legislation, if any is necessary, to mitigate the effects of cyclical reappraisal and to provide tax reform in Montana.

Property Tax Exemption Study Committee
The purpose of the committee is to conduct a study of property tax exemptions.  The committee shall determine whether property tax exemptions contribute to or impede the goal of an equitable property tax system and determine whether existing property tax exemption laws should be modified or repealed in order to achieve the goal of an equitable property tax system.