Beginning in 2026, Montana’s new property tax structure is designed to provide relief for primary residences and long-term rentals while shifting more of the tax burden to second homes, vacation properties, and short-term rentals.

Montana's new property tax legislation is one of the biggest changes to the state's tax system in decades. Beginning in 2026, the law is designed to provide tax relief to Montana residents who live in their homes full-time while shifting more of the tax burden to second homes, vacation properties, and short-term rentals.

If you own property in Montana, understanding these changes could help you avoid surprises when your next tax bill arrives.

Why the Law Changed

Over the last several years, Montana home values have risen dramatically. While rising values increased homeowner equity, they also caused property taxes to climb throughout the state.

Lawmakers responded by creating a new system that gives favorable tax treatment to primary residences and qualifying long-term rentals. Properties that are not occupied as a primary residence generally face higher tax rates.

What Is a Homestead?

Under the new law, a property qualifies as a homestead if it is the owner's primary residence and is occupied for at least seven months each year.

Qualifying long-term rental properties may also receive similar treatment if they are rented for at least seven months annually and are not used as short-term vacation rentals.

These properties receive lower tax rates than second homes and vacation properties.

How the New Tax Rates Work

This includes:

• Vacation homes
• Seasonal cabins
• Airbnb and VRBO properties
• Investment properties not used as long-term rentals

Note: Long-term rentals are rented for 28+ days for at least seven months per year.

How Taxes Are Calculated and Applied

Real estate taxes are based on property valuation. The formula is as follows:

Market Value: Established at the state level by the Montana Department of Revenue.

Tax Rate: Primary residence or long-term rental tiered rate for 2026.

• For second homes, vacation homes, and short-term rentals, a flat rate of 1.9% applies.
• For long-term rental of multi-family homes, a flat rate of 1.10% applies.

Mill levies: Additional taxes for each taxing jurisdiction to fund things such as fire departments, schools, and other local services. The mill levy amount can fluctuate based on local taxation changes.

The 2025 mill levy for Eureka was approximately .372511, while Smith Valley in Kalispell was approximately .48851. Let’s look at some examples to see how the taxes look in practice.

Real-World Examples

Consider two homes, one on Glen Lake in Eureka and one on Foys Lake in Kalispell. Both have a market value of $2,000,000.

What This Means for Montana Homeowners

Most Montana residents who live in their homes full-time are expected to benefit from the new law.

Potential benefits include:

For many homeowners, the legislation represents the first meaningful property tax relief they've seen in years.

What This Means for Investors

Long-Term Rental Owners

Owners who provide long-term housing may qualify for the same favorable tax treatment as primary residences. This was included to encourage additional housing supply across Montana.

Short-Term Rental Owners

Owners operating Airbnb, VRBO, or other short-term rental properties will likely see higher tax bills beginning in 2026 because those properties generally do not qualify for homestead treatment.

Investors may need to evaluate whether converting some properties to long-term rentals makes financial sense under the new tax structure.

What This Means for Second-Home Owners

Second-home owners are expected to experience the largest increases under the new law.

For example, a family that owns a seasonal lake cabin, ski condo, or vacation home may see a noticeably higher tax bill than a full-time Montana resident who owns a similar property.

Supporters of the law argue that Montana residents should receive priority tax relief. Critics argue that second-home owners already contribute significantly to local economies and could be disproportionately affected.

The Montana Department of Revenue property tax changes page is where you need to go to register as a primary residence or long-term rental. The registration window for 2027 is now open. Once enrolled, it is not necessary to re-enroll every year.

The Bottom Line

Montana's new property tax law creates a clear distinction between primary residences and second homes.

For many Montana residents, the changes should provide welcome tax relief. Long-term rental owners may also benefit from lower rates.

However, owners of vacation homes, second homes, and short-term rentals should prepare for potentially higher property taxes beginning in 2026.