In Montana, municipalities are divided into classes by state statute. The classification scheme is based on the population of each municipality. Members of the three largest classes are deemed cities, while the members of the fourth class are called towns. Cities and towns are classified at the time of their organization, and are reorganized when they change classification due to an increase or decrease in population. Unincorporated places and census designated places fall outside of this scheme, and are subject to county governance, and thus are not towns or cities.
A place may incorporate as a town when its population reaches 300 people. A municipality with a population between 1,000 and 5,000 people is a Third Class city. A municipality with a population between 5,000 and 10,000 people is a Second Class city. And a municipality with a population over 10,000 people is a First Class city. Under certain exceptions municipalities with a population of between 9,000 and 10,000 may elect, by resolution to be either a First or Second Class city. Under similar exceptions municipalities with a population of between 5,000 and 7,500 may elect, by resolution to be either a Second or Third Class city. And finally, municipalities with a population of between 1,000 and 2,500 may, by resolution be classified as either a town or Third Class city.