Montana

Tax Credits for Contributions to Student Scholarship Organizations

  • Tax-Credit Scholarship
  • Enacted 2015
  • Launched 2015

The Montana Tax Credits for Contributions to Student Scholarship Organizations program allows individuals and corporations to claim a 100 percent tax credit for contributions to approved student scholarship organizations (SSOs)— nonprofits that provide scholarships for private school and tutoring. The total amount of tax credits awarded statewide is limited to $1 million in 2022 and $2 million in 2023 and each year beyond, though the limit can increase 20 percent if the cap is met. No taxpayer may receive a credit larger than $200,000. Beginning in the 2016–17 school year, SSOs in Montana started providing scholarships to students to attend private school or receive tutoring.  Learn more about the program’s details on this page, including eligibility, funding, regulations, legal history and more. 

We do not administer this program.

  • 15

    Students Participating (Fall 2020)

  • 100%

    of Students Eligible Statewide

  • 2

    Scholarship Organizations (2020–21)

  • $500

    Average Scholarship Value (2016–17)

  • 4%

    Average Value as a Percentage of Public School Per-student Spending

All Montana K–12 students are eligible for scholarships through the Tax Credits for Contributions to Student Scholarship Organizations program

Participation
Year Ending

Student Funding

Scholarship amounts are determined by SSOs. The maximum scholarship is 100 percent of the average per-pupil expenditure for the second most recently completed fiscal year ($12,563 for 2019–20). 

Student Eligibility

All students between the ages of 5 and 18 in Montana are eligible.

EdChoice Expert Feedback

Montana’s tax-credit scholarship program currently only helps a small number of participating students, but policymakers recently fixed several design flaws that should allow for significantly greater participation. 

All Montana students are eligible to participate but fewer than 0.01 percent of students statewide actually use a scholarship. The main limiting factor was a tax credit cap of only $150 per donor, but that has been lifted to $200,000 per donor. 

The average scholarship size was only $500, which is just 4 percent of the average expenditure per student at Montana’s district schools, though the cap on scholarship values is somewhat higher (30% of the average per-pupil expenditures at district schools, or about $3,300). However, the law’s recent changes, including raising the maximum scholarship size from 50 percent to 100 percent of the state’s per-student funding, should result in higher scholarship values.Still, only $2 million in tax credits are available in 2023, which is equivalent to only 0.16 percent of Montana’s total K–12 revenue.  

In order to expand access to educational choice, Montana policymakers should dramatically increase the available tax credits and eliminate the cap on credits per donor. The program could also be converted into an education savings account to ensure that all students have access to the education that’s the right fit for them, whether private school or a customized course of education. 

Montana’s tax-credit scholarship program generally avoids unnecessary and counterproductive regulations. 

Rules and Regulations

  • Income Limit: None 
  • Prior Year Public School Requirement: None 
  • Geographic Limit: Statewide 
  • Enrollment Cap: None 
  • Scholarship Cap: 100 percent of the statewide average per-pupil expenditure ($12,563 for 2019–20) 
  • Testing Mandates: None 
  • Credit Value: 100% 
  • Per Donor Credit Cap: $200,000 
  • Total Tax Credit Cap: $1 million in 2022; $2 million in 2023 (escalator) 

SSO Requirements

  • Be a certified 501(c)3
  • Refrain from spending more than 10 percent of its donations on the administration of the fund
  • Must keep separate accounts for scholarship and administrative money
  • Report donations and expenditures to the state department of revenue
  • Pay out all donations in three years
  • Not limit gifts to a single school or type of school
  • Complete an annual review
  • Prevent any donation from being earmarked for a particular family, child or school
  • Not limit gifts to specific pupils
  • Keep records pursuant to the educational environment of the student

Tax Credits for Contributions to Student Scholarship Organizations State Groups

That Support School Choice

Big Sky Scholarships is a scholarship-granting organization that provides students private school scholarships.