Montana Republicans Sue to Block Property Tax Law

Challenge Targets 2025 Tax Changes

HELENA, Mont. — Three prominent Republicans are asking a judge to overturn one of the two major property tax bills passed in 2025, arguing the legislation was pushed through the Legislature in a way that violated Montana’s Constitution.

The lawsuit, filed Wednesday in Gallatin County District Court, seeks to invalidate Senate Bill 542. The plaintiffs — Sen. Greg Hertz of Polson, Senate Majority Leader Tom McGillvray of Billings, and former Sen. Keith Regier of Kalispell — say the process used to pass the bipartisan measure broke procedural limits designed to keep lawmakers from rewriting bills mid-session. They also argue it violated the constitutional requirement that non-budget bills contain only one subject.

Hertz and McGillvray opposed the legislation during the 2025 session and say the bill increased their own tax bills. All three plaintiffs claim their property taxes rose this year or will rise in 2026 as a result of the changes.

“I’ve heard from many of my constituents who are suffering from the tax shift these bills created,” Hertz said in a statement. “Lifelong Montanans are struggling to figure out how they’re going to afford to pay their massively increased property taxes, and many will likely have to resort to selling their homes and cabins that have been in their families for generations.”

How the Bills Were Passed

Senate Bill 542 and House Bill 231 reworked Montana’s property tax system by shifting more of the tax burden onto higher-value homes, business properties, second homes and short-term rentals. The changes lowered taxes for many middle-class homeowners after years of rising residential values.

Gov. Greg Gianforte promoted the policy during his 2024 re-election campaign. Supporters said shifting costs to luxury properties and second homes, often owned by nonresidents, would reduce pressure on local governments and offer relief to longtime Montana homeowners.

But the approach split Republicans. HB 231 stalled during the session, prompting Rep. Llew Jones of Conrad to move much of its content into SB 542, which had begun as a different property tax bill. Lawmakers also added $90 million in one-time rebates to draw support. Jones acknowledged during a hearing that the rebate was added to broaden backing for the bill.

Opponents denounced the strategy during the session and now cite it as the basis for the lawsuit. In their filing, the plaintiffs wrote: “SB 542’s supporters did exactly what the Constitution forbids. They took a dying, 40-page property tax rate restructuring bill … and bought its passage by bundling it with an appropriation for $90 million in one-time cash rebates.”

Potential Impact on Homeowners

The lawsuit does not seek to overturn HB 231, which contains similar language but was mostly superseded. Hertz said he does not expect rebates to be clawed back or past tax bills recalculated. Instead, he hopes the court returns Montana to its 2024 tax code beginning this year, allowing lawmakers in 2027 to try again.

Jones defended the law Wednesday, saying the rebate was a key part of the system because it helped identify primary residences. He warned that striking down the bill “puts at risk a whole lot of average Montanans that are a whole lot better off.”

The governor’s office echoed that concern. “If Senate Bill 542 is struck down, property taxes for Montana homeowners will increase significantly,” spokesman Sean Southard said.

Department of Revenue figures show the 2025 changes cut taxes for many median-value homeowners across most counties. Homes worth under roughly $1.7 million generally saw lower effective rates, while high-value and lakefront properties often saw increases.

Plaintiffs Say They Face Higher Bills

The complaint says Hertz’s annual taxes rose from $14,000 to $21,000 — a 50% jump — “as a direct result” of the changes. His home on Flathead Lake was valued at $2.9 million in 2024. McGillvray and Regier each own cabins that will now be taxed as second homes. Their properties are valued at $549,000 and $1.1 million.

Hertz said he has raised donations to pay for the lawsuit, estimating the effort will cost $25,000 to $50,000. He declined to identify the donors, saying some feared retaliation.