MISSOULA — While the market value of a median home in Missoula increased by 27% this year and the city is proposing a 3.5% tax increase, many residential properties will see a decrease in overall taxes paid to the city, according to officials.
The Missoula City Council is closing in on a final budget and the tax implications are becoming clear. On Wednesday, city administrators walked through calculations and legislation that make determining one's property tax bill challenging.
“There were a lot of changes at the Legislature,” said Jessica Miller, the city's administrator of website and digital engagement. “It's a little less straightforward this year to determine what a 3.5% city tax increase actually looks like.”
Tax bills sent to homeowners represent a breakdown in taxes paid to various jurisdictions.
The City of Missoula represents roughly 31% of a property's tax bill, followed by schools at 27% and Missoula County at 20%. State schools total 10%, special districts — primarily Mountain Line — account for 7% and the new city fire levy around 4%.
“This was a reappraisal year and market values increased significantly this year,” said Miller. “The market value of a median property in Missoula went up 27% this year. That's a pretty large increase. But the legislature made a lot of changes to tax rates.”
The market value of a property is set by the state, though an increase doesn't necessarily equate to an equal increase in the property's taxable value, Miller said.
“The taxable value is the importation number when it comes to calculating your city tax bill,” she added. “Typically, the market value by the state is a little bit lower.”
During the last Montana Legislature session, lawmakers reduced Montana's residential property tax rate to 0.75%. It's that reduction that will see some homeowners paying less in city taxes, even as the city proposes a 3.5% cost-of-living increase.
Citing an example, Miller said the market value of a median-priced home in Missoula sat at $399,000 last year. But under the state's latest appraisal cycle, that now stands at $507,000.
But the state's new tax rate for the same property dropped by 21%, meaning the homeowner will see a 14% decrease in city taxes.
However, those properties that saw a greater increase in market value may end up paying more.
“Some of these properties with a very large increase in market value over last year will be seeing an increase in their city taxes,” she said.
City CAO Dale Bickell said that over the past 25 years, the state's tax structure has shifted heavily to residential properties. In 1999, residential properties accounted for 42% of the state's tax base, but that climbed to 64% in 2024. Changes made by the last Legislature have reduced that burden to roughly 60%.
In contrast, commercial properties accounted for 37% of the state's tax base in 1999. That figure fell to only 28% last year but has risen this year to 32%.
City and county officials see it as progress in balancing the tax burden more evenly across residential, commercial and industrial properties, though that balancing act needs to go further.
“There's a lot of factors that play into that – policy decisions by the Legislature, changes in the economy, all those things contribute to that. But this 4% (residential) decrease is also a policy decision made the Legislature.”
Along with tax rates and market values — all set by the state — city and county officials are also watching newly taxable values. That figure indicates how much new revenue local governments will receive.
The figures also represent growth in the tax base, driven in part by new construction. For the City of Missoula, newly taxable values fell from $5.7 million last year to $3.4 million this year.
“The new tax rates are going to lower our newly taxable property numbers,” Bickell said. “We tried to account for that in our numbers. Even as Missoula is a rapidly growing community, our increase in the tax base compared to the whole is pretty small.”
