House Bill 279 Increased Tax Credits For Qualified Education Contributions

House Bill 279, passed during the 67th Montana Legislative Session, increased the allowable tax credit for donations made to qualified education organizations. The Innovative Education Program (IEP) credit is for donations made to public schools. The Student Scholarship Organization (SSO) credit is for donations made to private school scholarship organizations.

Taxpayers may take the IEP credit for donations made to a school district for the purpose of providing supplemental funding for innovative educational programs. These are advanced academic programs which are not part of the district’s regular curriculum; rather, they serve to enhance the existing academic program of an eligible public school.

Likewise, a credit is available to taxpayers for donations made to a student scholarship organization to help offset the costs of attending a private school. SSOs are 501(c)(3) tax-exempt entities which receive donations from individuals and businesses to provide scholarships to eligible students for use at a qualified education provider (QEP). QEPs are private schools—not to include home schools—which qualify for compulsory enrollment.

The previous credit for each type of donation was equal to the donation, up to $150; however, HB 279 increased the credit to equal donations up to $200,000. In addition, the bill capped the allowable credit to a total of $1 million for each credit for tax year 2022. The cap will double to $2 million each for tax year 2023 and, if 80% of the aggregate is met in subsequent years, the total available tax credit will increase by 20% for the succeeding tax years.

The credit’s aggregate threshold is tracked on the department’s Education Donation Portal homepage at EducationDonations.mt.gov. The homepage displays how much of the credit has been reserved, how much is available, and how much is pending. The homepage also contains contact information for SSOs and PSDs, as well as a list of qualified education providers who have received scholarships from SSOs.

The caps for both credits have been met for 2022. Taxpayers may make donations eligible to receive the credit in 2023.

This bill is subject to the ARPA Savings Clause; therefore, the credit can revert to the previous maximum of $150 if the savings clause is triggered. For 2022, however, the clause was not triggered, thereby assuring that the new maximum will be in effect for this year.