🎯 STRisker: Bulletin - Montana
Short-Term Rentals in Montana Face a Heavy Tax Reality Check
A Deep Dive into Your Area’s STR Updates — Helping You Navigate the Ever-Changing Rental Landscape.
Short-Term Rentals in Montana Face a Heavy Tax Reality Check
The clock is ticking for short-term rental owners in Montana as a new tax law brings significant changes that will sharply increase the cost of operating STRs. The tax relief package, signed by Gov. Greg Gianforte in May, is touted as a win for homeowners — but for STR operators, the outlook is far from sunny.
The state’s new tax code introduces a homestead exemption for primary residences and long-term rentals (defined as those rented on a monthly basis for at least seven months annually). This means STRs, vacation homes, and second properties that don’t meet this threshold are on the outside looking in — and facing a 68% tax increase by 2026.
The shift is a deliberate one. Without the new code, the Department of Revenue estimates these properties would have only seen a 14% bump. Instead, lawmakers chose to shift the burden from owner-occupied and long-term rental homes to properties seen as speculative or investment-based — particularly short-term rentals.
Residential Property - Tax Bills and Payment Dues
Even more concerning for some STR owners are the interim rates for 2025, which introduce inconsistencies in year-over-year tax bills. One year may bring a spike, the next a dip — and vice versa. Some counties are especially hard hit: Missoula County STRs are projected to see a 105% increase, while Lewis and Clark could jump 94%.
This tax policy also introduces tiered taxation based on property value — so those with high-end STRs could face drastically higher rates. For instance, a vacation rental worth over $1.5 million will now be taxed at nearly triple the rate of a modest home worth under $400,000.
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