HELENA — At an event in Helena Tuesday, business leaders expressed ongoing frustration with Montana’s property tax system – including the changes passed during last year’s state legislative session.
The Montana Chamber of Commerce kicked off its annual “Business Days at the Capitol” Tuesday at the Delta Hotels Helena Colonial. One of the main presentations focused on the business impacts of House Bill 231 and Senate Bill 542, the pair of bills that reshaped property tax rates across the state.
Property taxes were perhaps the biggest issue during the 2025 Legislature, but speakers Tuesday argued the political arguments put residential taxes at the center and hadn’t given the same attention to the concerns business owners have had.
“There’s a picture to be painted here and it’s, this is not the most attractive place as far as property taxes are concerned,” said Chamber president and CEO Todd O’Hair.
HB 231 and SB 542 established interim tax rates for 2025, with higher rates for properties worth more. In 2026, a much different system will take effect, setting up “homestead” rates – essentially lowering property tax rates for primary residences, long-term rentals and smaller commercial properties, but increasing rates on properties that don’t qualify for homestead rates.
Groups like the Chamber opposed the legislation, saying it was not creating property tax relief, but shifting the tax burden from residential properties toward businesses – particularly utilities and other large industrial taxpayers.
Bob Story, executive director of the Montana Taxpayers Association, pointed to an analysis his organization produced, which said the 2025 rates could create significant savings for residential taxpayers, but increases for pipeline and telecommunication companies.
Paul Hopfauf, director of strategic planning and growth for MDU Resources, said Montana’s property tax structure is a barrier to attracting new investment to the state.
“I think, while income tax is important, property tax is much more impactful to how capital gets allocated,” he said. “So when capital flees a state or chooses another state because it's a more competitive environment, so go the jobs.”
One big question that has been in the background of tax debates is whether Montana should look at a sales tax, as a way to offset the costs of more substantial property tax relief. Montana is one of only five states in the country that don’t have a statewide sales tax.
During Tuesday’s event, an audience member asked the speakers whether they thought a sales tax was a good option for the state. Story said his organization has long supported a sales tax, as a way to account for changes in the structure of Montana’s economy – away from heavy industry and toward things like tourism.
“It broadens the tax base, brings in people who aren't directly paying taxes, and so they have some ownership in government,” he said.
O’Hair said there would be significant political hurdles to a sales tax, and that he expected there would be no “appetite” to tackle it in the next legislative session. However, he said the Chamber has seen evidence people’s reactions to the idea might be changing.
“We are seeing movement, where people are getting to the point where it's like, ‘I can't stomach this anymore, and I'm much more open to an alternative tax,’” he said.
Business Days will continue Wednesday in Helena.
