This week, two bills aimed at reforming Montana’s property tax benefits for farms and ranches were discussed in the Legislature, garnering significant attention and feedback from various stakeholders. The proposed changes are intended to prevent properties from qualifying for agricultural tax benefits without genuine agricultural activity. House Bill 27 and Senate Bill 4 specifically target tax loopholes that allow non-agricultural properties to benefit substantially.
House Bill 27, reviewed by the House Taxation Committee, proposes revisions to the tax code, requiring proof of farm income for agricultural tax status, while Senate Bill 4 aims to adjust tax calculations for land beneath homes on rural properties, reducing tax benefits for properties that should be taxed as high-value real estate.
Advocates argue these reforms will ensure agricultural tax benefits are appropriately applied. Republican Lt. Gov. Kristen Juras supported HB 27, citing misuse of agricultural tax rates by non-agricultural landowners. “There are pieces of property across the state that are taking advantage of the preferential agricultural tax rates when in fact they are not bona fide agricultural operations,” she stated.
The Montana Department of Revenue backs both bills, which were developed after previous legislative efforts failed in 2023. Under current laws, properties over 160 acres automatically receive agricultural classification, valued for tax purposes on potential farm earnings. Smaller lands must show at least $1,500 yearly farm income, a threshold unchanged since the 1980s. HB 27 will mandate income verification for all properties seeking agricultural status, excluding income from activities like hobby farming and hunting.
Proponents argue these measures will stop non-qualifying property owners from accessing full farm tax breaks. Critics, however, raise concerns about effects on conservation easements and subsistence farms. Planned amendments to HB 27 consider subsistence farming by potentially lowering the $1,500 income threshold. Meanwhile, supporters of SB 4 want to address tax inequalities on high-value properties with an agricultural label.
In Wednesday’s Senate Taxation Committee, examples were presented showing large tax reductions for properties with minimal agricultural activity. Revenue Department Property Assessment Bureau Chief Bryce Kaatz highlighted discrepancies where properties like those on Flathead Lake pay much lower taxes due to agricultural designations. Despite potential tax increases, Revenue Department Director Brendan Beatty argued that SB 4 aims for a fairer system, acknowledging some property owners may be adversely impacted.
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