Property taxes generally make up a smaller portion of a person’s overall tax burden in comparison to federal income taxes and even state sales taxes. However, property taxes on assessed home values, which may vary widely from state to state, can be a significant factor in deciding which state to live in. The annual taxes on the nation’s median home value of $176,000 can vary from $489 at 0.28% in Hawaii to $4,029 from a 2.29% effective tax rate in New Jersey. Knowing which states have a property tax rate lower than the national average can help you make some important decisions. Montana is one state that has a property tax rate below the national average.

Average Property Taxes

There are different ways to assess property tax rates, and different organizations track these tax rates and present their data in different ways. WalletHub’s 2016 Property Taxes by State report may be the most recent study, as of May 2016, yet it is not the most comprehensive in presenting its data. This study lists Montana as tied for 21st-cheapest effective tax rate next to Oklahoma at 0.87%, with a median property tax bill on the national average home value of $176,000, with $1,528 in annual taxes. However, the median home value in Montana is $187,600, creating a tax bill of $1,632 annually.

In Montana, residential properties are actually exempted from a larger portion of taxes than industrial or commercial properties. This exemption ranges from 40 to 50% annually, and was 47% in 2014. SmartAsset provides a useful analysis by providing an effective tax rate instead of a mill rate, as used by the state of Montana. SmartAsset also provides an index to measure the value of your property taxes against the main services that they are intended to fund; namely education, crime rates and low property taxes. This index lists the counties of Carbon and Blaine as the number one and number two best Montana counties to live in, respectively. Carbon has a low effective property tax rate of 0.62%, yet Blaine has a 1.61% property tax rate and a higher crime rate, and both have the same education score. In this light, average property tax, measured against other factors important to homeowners, should not be the only consideration.

The Tax Foundation also provides information on taxation across a number of categories. Its property tax report from 2010, seemingly outdated, showed Montana at 29th, with an effective property tax rate of 0.94%. Montana has decreased residential property taxes since 2010.

How Montana Compares to the National Average

The most recent data from SmartAsset shows that the national effective property tax rate is 1.211% of assessed value, while Montana has just a 0.87% effective property tax. On the median home value supplied by WalletHub, this means a difference of over $600 annually on property taxes between Montana and the national average.

However, to show how different property taxes can be, Glacier County in Montana has the highest effective rate at 1.44%, yet its median home value is just $80,200. The highest median home value of $239,600, for the county of Madison, has a low tax rate of just 0.55%, which is below even the state average tax rate. Glacier County has mostly state parks and is home to the Blackfeet Tribe, whereas Madison has a smaller population with a more rural base.

How Montana Compares to its Neighboring States

Montana is bordered by four states: Idaho, Wyoming, and North and South Dakota. Idaho has an effective residential tax rate of 0.771%, Wyoming's rate is 0.623%, South Dakota's rate is 1.356% and North Dakota's rate is 1.221%. Montana enjoys a position of being in the middle of its four neighbors, with two being higher and two being lower. However, Montana is still an attractive state for homeowners, due to its property taxes being lower than the national average.

Montana provides a positive property tax rate system that favors lower taxation for owner-occupied homeowners, but there are about 20 other states that have lower property taxes.

Nebraska Property Tax Guide

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