Lawmakers File Second Lawsuit Aimed at Overturning 2025 Property Tax Legislation
A first lawsuit, filed in January over Senate Bill 542, took issue with the process lawmakers went through to pass the bills. The second, filed earlier this week in Gallatin County District Court, claims SB 542 violates equal protection guarantees for taxpayers.
By Mariah Thomas
The same trio of lawmakers who filed a lawsuit earlier this year aimed at overturning Senate Bill 542, one of two property tax relief bills the governor signed into law from 2025’s legislative session, are hedging their bets. They filed a second lawsuit over the same piece of legislation this week, taking a different tack by claiming the legislation violated their right to equal protection.
“Anytime you challenge any particular bill, a lot of times you use different approaches,” said Sen. Greg Hertz, R-Polson, in an interview with the Beacon.
Hertz chairs the Senate Taxation Committee and was an ardent opponent of SB 542 as it went through the legislature in 2025. He is one of the three plaintiffs in both lawsuits, and is joined by Sen. Tom McGillvray, R-Billings, and former Kalispell state Sen. Keith Regier. All three saw their own property taxes go up as a result of the legislation. The second lawsuit, filed Oct. 13 in Gallatin County District Court, is against the state, the Department of Revenue and Department of Revenue head Brendan Beatty.
The bill in question established tiered tax rates for homes, small businesses, farms, and ranches; offered state funds as a contingency, should cities with charters in conflict with the law see lawsuits over reduced tax rates; and included $90 million in funding for rebates that eligible Montana homeowners could claim for their 2024 property taxes.
SB 542 and, along with it, House Bill 231, resulted in around 80% of Montanans seeing tax reductions last year. However, some have had their taxes climb significantly and raised issue with the tax reform. The bills, which saw some Republican lawmakers defect from the party line to pass them, served as kindling for a GOP intra-party feud that played out in primaries across the state this spring. Property taxes remain a top issue for many candidates running for the state legislature in the Flathead this fall. Most generally agree more changes are needed to get costs down for Montanans.
The January lawsuit filed by Hertz, McGillvray and Regier took aim at the process by which SB 542 passed through the statehouse. It ultimately passed near the session’s end, following amendments that took it from a three-page document to more than 40.
The second takes a different tack, claiming the legislation violates taxpayers’ right to equal protection in both the state and federal constitution.
“Under Montana law and the Montana Constitution members of a class must be given the same tax treatment,” the lawsuit states. “A tax is not uniform when a different rate or valuation method is applied to like property.”
The lawsuit goes on to parse out that Class 4 properties — residential properties including parcels of land and the homes on them — are subject to “widely varying tax rates for properties within the same class.”
Properties to which the state’s homestead reduced tax rate apply pay a tax rate as low as 0.76%, or as high as 1.9%. The rates depend on the market value of the property in relation to the median residential value. It’s that variation in tax rates the lawsuit hinges on. The text references the often-used argument by opponents of the legislation that the tax burden was “shifted away from some class members to other class members within the same class.”
“Montanans deserve a property tax system that is fair, transparent, and constitutional,” Hertz said in a press release announcing the lawsuit’s filing. “The Legislature has the authority to establish property classifications, but once property is placed within the same class, the constitution requires that taxpayers be treated equally.”
The second lawsuit’s filing comes at a loaded moment. The first lawsuit will begin oral arguments in Gallatin County on Oct. 21, Hertz said. It also coincides with property tax bills hitting Montanans’ mailboxes at the month’s end, and it dropped mere weeks before Election Day on Nov. 3.
Hertz, however, told the Beacon the suit has long been in the works and was filed once lawyers thought it was ready. He anticipates legislators will begin hearing from residents facing steep climbs in property tax costs once tax bills hit mailboxes.