Unqualified Montana landlords to see higher property taxes after exemption deadline passes

Thousands of additional property owners applied for a tax exemption after the deadline to do so was extended by three weeks, but the final numbers still lagged behind previous estimates, leading some to worry that many landlords will see higher property taxes and, by extension, impose higher rents.

After huge spikes in residential property tax bills, the 2025 Legislature passed two sweeping property tax measures aimed at lowering those costs.

One of the flagship features of the reforms, backed by Republican Gov. Greg Gianforte, was the tax exemptions for primary residents and long-term rental landlords that are set to go into effect in the 2026 tax year. To qualify, homeowners and landlords must apply and prove eligibility with the Montana Department of Revenue. The original deadline was March 1, but that was ultimately extended by three weeks.

After the deadline passed on Friday, the revenue department had received 35,896 applications — many still pending — from long-term rental landlords, according to department spokesperson Jason Slead. A previous estimate found in a document on the fiscal impact of these new laws put the number of likely applications at 54,300.

Those nearly 36,000 applications account for 69,414 housing units, Slead said. But the state of Montana has roughly 147,000 units of renter-occupied housing, the Montana Free Press reported.

This discrepancy in applications and number of long-term rentals matters. If a landlord does not apply and qualify for the exemption, the property will be subject to the higher tax rate equivalent to that of a second home, which will lead to a higher property tax bill in 2026. In recent years, some landlords in Montana have raised rents as their property tax bills have increased.

Extending the application window by three weeks was crucial: the department  received 5,390 more applications during that time which accounts for 13,703 housing units, according to Slead. That's a roughly 18% increase.

Proponents of the new laws repeatedly said that an exemption for long-term rental owners would help protect tenants and possibly lower rents, but Democrats pushed back on that during the session, arguing that renters should not rely on the "charity" of their landlords.

"I think that's the problematic aspect of the [new law] is that renters are entirely reliant upon their landlord applying for the lower property tax rate," said Rep. Jonathan Karlen, D-Missoula.

Karlen unsuccessfully brought a bill to provide a tax credit to renters that would have been calculated based on their landlord's property tax bill relative to their income. Karlen said he has been encouraging landlords to apply, but if they don't, they could "increase rent as much as the market will allow" when their property taxes go up.