Montana Economists Discuss Potential State Sales Tax

Experts weigh pros and cons of a sales tax to offset rising property taxes

Jan. 27, 2026 at 8:47pm

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Economists from the University of Montana's Bureau of Business and Economic Research (BBER) discussed the potential impacts of a state sales tax at their annual Economic Outlook Seminar in Helena. While some see a sales tax as a way to diversify revenue sources and reduce property taxes, experts warn it could disproportionately impact lower-income households and may not raise as much from tourists as expected. The BBER seminar tour will continue across the state, with a focus on the long history of sales tax proposals in Montana.

Why it matters

The possibility of a state sales tax has been a recurring topic in Montana political circles, with proponents arguing it could help offset rising property taxes. However, critics warn a sales tax could be regressive, hitting lower-income households harder. As Montana grapples with these tradeoffs, the BBER's analysis provides important context for policymakers and the public.

The details

At the seminar, BBER director of research Jeff Michael said many are interested in a sales tax as a way to diversify revenue sources and potentially reduce property taxes. However, he noted a general sales tax likely wouldn't raise enough to completely replace property taxes, and may not generate as much from tourists as expected, as Montana visitors tend to spend less on retail and more on outdoor activities and gasoline. The Montana Budget and Policy Center has also argued a sales tax would make the state's tax system more regressive. Michael agreed lower-income households could be more affected.

  • The University of Montana's Bureau of Business and Economic Research (BBER) kicked off a nine-city tour of their annual Economic Outlook Seminar on January 27, 2026 in Helena.
  • In 1971 and 1993, Montana voters overwhelmingly rejected ballot measures to introduce a state sales tax.

The players

Jeff Michael

Director of research at the University of Montana's Bureau of Business and Economic Research.

Bob Story

Former state lawmaker and executive director of the Montana Taxpayers Association, who spoke about the long history of sales tax proposals in Montana.

Montana Budget and Policy Center

A research organization that released a report arguing a general sales tax would make Montana's tax system more regressive.

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What they’re saying

“In part that's just because Montana visitors don't spend as much on retail sales that are taxable as we might see in other states that get a lot of sales tax from their tourist economies. We spend less on shopping, not quite as much in restaurants – they're out doing outdoor activities, and they're driving around spending a lot on gasoline.”

— Jeff Michael, Director of research at the University of Montana's Bureau of Business and Economic Research

“If you just ask the question right out, it's a hard no. But if you start saying, 'Would you support one if it did these things' – and mainly reduce your property taxes – then you get close to a majority, but it's still a ways away.”

— Bob Story, Executive director of the Montana Taxpayers Association

What’s next

The BBER seminar tour will continue this week in Great Falls and Missoula, followed by events later on in Billings, Bozeman, Butte, Kalispell, Lewistown, and Havre.

The takeaway

As Montana grapples with the tradeoffs of a potential state sales tax, the BBER's analysis highlights the complex considerations around revenue diversification, property tax relief, and the regressive impact on lower-income households. Policymakers will need to carefully weigh these factors as they continue to debate this long-standing issue.