Montana

Property Classification:

Montana divides its real and personal property into twelve distinct classes (class one through ten, class twelve, and class thirteen). Each class is taxed at a different percentage of market value, gross proceeds, or productive capacity.

All "land" is classified according to its use or uses and graded within each class according to soil and productive capacity.

Forest land is classified as "class ten" property. Class ten property is taxed at 0.35% of its forest productivity value. (MCA 15-6-143).

Criteria for Forestland Classification:

"Forest land" is defined as contiguous land of 15 acres or more in one ownership that is capable of producing timber that can be harvested in commercial quantities and that is producing timber unless the trees have been removed by man through harvest or by natural disaster. (MCA 15-44-102)

Forest land includes land that has not been converted to another use and on which the annual net wood production equals or exceeds 25 cubic feet an acre at the culmination of mean annual increment.

The phrase "capable of producing timber that can be harvested in commercial quantities" means forest land that

(a) forest land that can produce 100 board feet or more of lumber per acre per year in live softwood trees as measured using the Scribner Log Rule, at the culmination of the mean annual increment for fully stocked, natural stands; and

(b) is at least 10 percent stocked with softwood timber of any size on an area at least 120 feet in width; or

(c) has been converted from another use and exhibits a minimum stocking rate of 300 seedlings and/or saplings per acre (12-foot average spacing); or

(d) does not meet the stocking requirement specified in (b) or (c), but has had the trees removed by man through timber harvest or by fires and other natural disasters, and has been, or will be, naturally or artificially regenerated within ten years. (ARM 42.20.701)

A landowner may apply for a 20-year reduction in value for forest lands upon which trees have been destroyed by fire, disease, insect infestation, or other natural disaster, such that the lands affected will not meet minimum stocking requirements. (MCA 15-44-104)

Valuation and Assessment:

Forest productivity value - means the value of forest land for assessment purposes, which is determined only on the basis of its potential to produce timber, other forest products, and associated agricultural products through an income approach. In applying such value, the Department of Revenue has divided the state into appropriate forest valuation zones and established a uniform system of forest land classification that takes into consideration the productive capacity of each site to grow forest products and furnish other associated agricultural uses (MCA 15-44-103).

Site index equations developed by researchers at the University of Montana are used to estimate productivity of forest parcels in Montana. The weighted mean average of each forest polygon is utilized by the GIS to calculate forest assessments and is stored in a GIS database for each polygon. (Montana Department of Revenue, 2018)

Forest Land Valuation Zones (ARM 42.20.720)

The Department of Revenue has divided the state into forest valuation zones, with each zone designated to recognize the uniqueness of marketing areas, timber types, growth rates, access, and other pertinent factors that affect value. The designated forest valuation zones and the counties contained within each zone are:

Zone 1 - Northwest: Flathead, Lake, Lincoln and Sanders counties;

Zone 2 - Southwest: Beaverhead, Deer Lodge, Granite, Jefferson, Madison, Mineral, Missoula, Powell, Ravalli, and Silver Bow counties;

Zone 3 - Central: Blaine, Broadwater, Cascade, Chouteau, Fergus, Gallatin, Glacier, Golden Valley, Hill, Judith Basin, Lewis and Clark, Liberty, Meagher, Park, Pondera, Teton, Toole, and Wheatland counties;

Zone 4 - Eastern: Big Horn, Carbon, Carter, Custer, Daniels, Dawson, Fallon, Garfield, McCone, Musselshell, Petroleum, Phillips, Powder River, Prairie, Richland, Roosevelt, Rosebud, Sheridan, Sweet Grass, Stillwater, Treasure, Valley, Wibaux, and Yellowstone counties.

Forest Map

All forest map information relating to the production of forest assessments is contained in the department’s GIS. County staff work to pick up changes in forest land classification via Form-AB26, forest land applications, visual inspections, communication from landowners, etc. When a change in forest classification is initiated, county staff and GIS analysts work to update the ag/forest GIS with correct classification, acres and productivity figures for that area or parcel. Once the GIS data has been updated, the new information is loaded into ORION for valuation. Additionally, new digital maps reflecting the updates are published and made available for county staff. Imagery, forest and agriculture classification, soil/forest productivity, parcel boundary, and roads are just some of the GIS layers available for county staff.

The only forest productivity used in the valuation process is the original forest productivity GIS database built in 2008. No modifications or updates to the productivity data have been made. If new areas of forest classification are made, productivity for those areas is derived from the original forest productivity database.

Forest Land Valuations by Zone (ARM 42.20.170)

Each valuation zone has the same valuation formula; however, the income and expense data varies with each zone. The valuation data is applied to the weighted mean average board foot yield calculated by the GIS for each forest land polygon. The weighted mean varies from one forest polygon to the next. Therefore, there is an unlimited combination of forest land assessed values that can occur. Valuation data is updated for the beginning of each reappraisal cycle and then frozen for the duration of the cycle.

Periodic Reappraisal: Beginning January 1, 2015, all property within class three and class four must be revalued every 2 years, and all property within class ten must be revalued every 6 years. Reappraisal of class ten property is complete on December 31 of the sixth year of the reappraisal cycle. The amount of the change in valuation from the base year for class ten property must be phased in each year at the rate of 16.66% of the change in valuation.

The phase-in formula for each year of the reappraisal cycle is as follows (ARM 42.20.745):

(a) Change in value = full reappraisal value - value before reappraisal (VBR);

(b) Phase-in value (year 1) = value before reappraisal + (change in value x .1666);

(a) Change in value = full reappraisal value - value before reappraisal (VBR);

(c) Phase-in value (year 2) = value before reappraisal + (change in value x .3332);

(d) Phase-in value (year 3) = value before reappraisal + (change in value x .4998);

(e) Phase-in value (year 4) = value before reappraisal + (change in value x .6664);

(f) Phase-in value (year 5) = value before reappraisal + (change in value x .8330); and

(g) Phase-in value (year 6) = value before reappraisal + (change in value x 1.000).

Special Circumstances: A landowner may apply for a 20-year reduction in value for forest lands upon which trees have been destroyed by fire, disease, insect infestation, or other natural disaster, such that the lands affected will not meet minimum stocking requirements. If a landowner shows to the department's satisfaction that the landowner's forest lands have been destroyed the department shall reduce the value of the forest land by 50% of the original forest productivity value per year. (MCA 15-44-104).

Standing timber

Standing timber is exempt from property taxation (MCA 15-6-223).

Montana does not have a timber severance tax.

Forest Fire Protection (Fire Protection Assessment) Fee

An owner of land classified as forest land that is within a wildland fire protection district or that is otherwise under contract for fire protection by a recognized agency is subject to the fees for fire protection (MCA 76-13-201).

The Department of Natural Resources & Conservation (DNRC) has been authorized to provide fire protection service to the forest land owners at a cost not more than $50 for each landowner in the protection district and of not more than an additional 30 cents per acre per year for each acre in excess of 20 acres owned by each landowner in each protection district, as necessary to yield the amount of money provided for in 76-13-207. Assessment, payment, and collection of the fire protection costs must be in accordance with 76-13-207.

For 2020, the forest fire protection fee is $45.30 per landowner per district plus an additional 29 cents for each acre owned in excess of 20 acres.

Fire Hazard Reduction Fee

The law requires that the person responsible for actually treating the hazard (landowner, logger, or purchasing mill) enter into a Fire Hazard Reduction Agreement (Agreement) with the State's DNRC Forestry Division BEFORE cutting any forest product from private forest lands in Montana (Sections 76-13-401 through 76-13-414 MCA. The agreement is a legal and binding contract between the State and the contractor.

The Agreement requires that the contractor-the person who signs the Agreement-pay a $25.00 non-refundable application fee and post a performance bond to guarantee that they will comply with the terms of the Agreement. This bond is usually a cash payment that the purchasing mill withholds from log delivery payments and forwards to the State. Currently, the bond is $6.00 per thousand board feet.

An additional $1.15 per thousand board feet is withheld to cover administrative and MSU Extension Forestry fees. $.85 is for program costs and $.30 (currently) is for a Montana State University Forestry Extension Service special revenue account.

Montana Department of Revenue – Property Assessment Division. 2018. Montana Forest Land Classification and Valuation Manual. Helena, Montana.

Montana Department of Natural Resources & Conservation. 2019. Fire hazard reduction fact sheet.

Montana Department of Natural Resources & Conservation. 2019. Landowners frequent asked questions about Fire Protection Assessment.