The Rising Tide of Property Taxes Across the U.S.
In recent years, the United States has witnessed a significant surge in property taxes, closely mirroring the upward trajectory of home prices. This trend has exacerbated the nation’s affordability crisis, making it increasingly challenging for individuals to achieve homeownership. According to a report by Redfin, between 2019 and 2024, nearly every major metropolitan area experienced an increase in property taxes. Indianapolis, Indiana, saw the most dramatic rise, with a staggering 66.7% increase in median monthly property bills. Atlanta, Georgia, followed closely, with a 65.8% increase, highlighting the growing financial burden on homeowners.
The Burden of Higher Property Taxes
The Southeast region has been particularly hard-hit by rising property taxes. Cities such as Jacksonville and Tampa in Florida reported increases nearing 60% since the pandemic. This trend underscores the broader economic challenges, as homeowners grapple with the dual pressures of higher taxes and inflated home prices. The surge in property taxes has been further complicated by the influx of out-of-state buyers, especially in regions like Montana, where second home sales have significantly impacted local markets.
Montana Considers a Solution
In response to these challenges, Montana is taking proactive steps to alleviate the burden on its residents. A proposed bill, HB 231, aims to reduce property taxes on primary residences, long-term rental properties, and smaller commercial entities, while increasing taxes on secondary homes and short-term rentals. Sponsored by Republican Rep. Llew Jones, this legislation reflects a broader effort to reform Montana’s tax system, initiated by Governor Greg Gianforte. The bill, often referred to as the "homestead" bill, seeks to provide direct relief to over 230,000 homeowners, offering a 17% reduction in their property taxes.
A Balanced Approach to Tax Reform
Montana’s approach to tax reform is not isolated. The state’s average property tax rate of 0.75% is already below the national average of 0.90%. However, the proposed legislation goes a step further by targeting secondary homes, many of which are owned by out-of-state residents. This strategic move aims to ensure that the tax burden is distributed equitably, with part-time residents contributing their fair share to local services and infrastructure. Additionally, a complementary bill, HB 154, proposed by Democratic Rep. Jonathan Karlen, introduces a "housing fairness" income tax credit, offering relief to homeowners and renters with incomes below $150,000.
Reactions and Feedback from Stakeholders
Stakeholders have turards to the proposed bills with optimism and scrutiny. Kaitlin Price, spokesperson for Governor Gianforte, emphasized the potential benefits, highlighting that the legislation could directly reduce taxes for over 215,000 primary residences and 32,000 small businesses, while indirectly aiding 130,000 renters. Rep. Jones acknowledged the bill’s imperfections but stressed its positive impact. Public sentiment is mixed, with some expressing concerns about the increased taxes on secondary homes, while others view it as a necessary measure to support local communities.
What’s Next for Montana’s Property Tax Reform?
As HB 231 and HB 154 move through the legislative process, they are under review by the Montana State Senate Taxation Committee. Potential amendments could further shape the bills’ impact. Final approval by Governor Gianforte would be the last step before enactment. These proposals represent a nuanced approach to tax reform, balancing relief for primary residents with measures to ensure equitable contributions from secondary homeowners. The outcome of this legislation will be closely watched, setting a precedent for other states grappling with similar challenges.
