When simple linear recursive tracking techniques are applied to quantized altitude reports, certain errors in estimation of altitude and altitude rate can be attributed to the response of the tracker to transitions between quantization levels. These errors can be reduced by use of an estimation technique which explicitly recognizes the quantized nature of the inputs. Smoothing of the level occupancy time (i.e., the time spent at each quantization level) can be used to control the response to redundant samples taken at the same quantization level. Further improvement is achieved by consistency tests which use particular properties of quantized data to detect changes in rate. This document presents a theoretical analysis of tracker repsonse to quantized inputs. A tracking algorithm is synthesized using these techniques and simulation results using various altitude profiles are presented.