Tax Credits for Contributions to Student Scholarship Organizations

This program offers 100% tax credits to individuals and corporations that donate to SSOs. All Montana students ages 5 to 18 are eligible, and there is no enrollment cap. The maximum scholarship amount is 100% of the average per-pupil expenditure for the second most recently completed fiscal year. SSOs are generally allowed to set their own criteria and priority categories for awarding scholarships. Credits are limited to $6 million for the 2025 tax year, and if 80% of the previous year’s budget cap was met, next year’s cap increases by 20%. Individuals and corporations may donate up to $200,000 per year. Married couples filing jointly may receive a tax credit of up to $400,000 per year. Unused credits may be carried forward for up to three years.

Funding Mechanism: Private donors fund this program by donating to SSOs. They receive tax credits for their donation, up to certain limits. 

Universal Eligibility: ✅
Universal Usage: ❌
Universal Funding: ❌
Truly Universal: ❌

(Last updated December 16, 2025)

Funds may be used for tuition and fees at private schools. 

(Last updated December 16, 2025)

View program requirements for parents, schools, and scholarship granting organizations by clicking on each hyperlink.

(Last updated December 16, 2025)

MT CODE § 15-30-3101 – 3110

(Last updated April 21, 2025)

This program was the subject of three different lawsuits which ultimately upheld the program as written by the Legislature. 

Most notably, on June 30, 2020, the U.S. Supreme Court in Espinoza v. Montana Department of Revenue ruled in favor of parents seeking the right to choose religious schools for their children participating in Montana’s tax credit scholarship program, overturning a prior decision of the Montana Supreme Court striking down the program. The U.S. Supreme Court held that Montana’s Supreme Court erred in applying their state constitution’s no-aid provision (AKA Blaine Amendment restricting state funding of religious entities) to the tax credit scholarship program.  

The case began in 2015 when Montana parents sued the Montana Department of Revenue for imposing a regulation on the program that prohibited parents from choosing a religious school for their children using tax credit scholarship funding. The trial court ruled in favor of the parents, finding the Department of Revenue had made a mistake of law and thus the Blaine Amendment could only apply to appropriations, not tax credits. On December 12, 2018, the Montana Supreme Court overruled the lower court. Espinoza v. Montana Dept of Revenue, 2018 MT 306. The Court found that the department of revenue exceeded its authority by adopting a rule to exclude religious schools but reasoned that Montana’s constitutional provision restricting state aid to sectarian schools is permissibly broader than the federal constitution, and therefore, did not give deference to the U.S. Supreme Court decision upholding the constitutionality of tax-credit scholarship programs in ACSTO v. Winn (see ARIZONA).   

The U.S. Supreme Court agreed to take the case in June 2019. The Question Presented to the Court: “Does it violate the Religion Clauses or Equal Protection Clause of the United States Constitution to invalidate a generally available and religiously neutral student-aid program simply because the program affords students the choice of attending religious schools?” Answer: yes. The Court opined that if a state adopts a school choice program, it cannot block a parent from using funding from the program to access “some private schools solely because they are religious.” The Court stated further, “That ‘supreme law of the land’ condemns discrimination against religious schools and the families whose children attend them.” Espinoza v. Mont. Dep’t of Revenue, 140 S.Ct. 2246, 207 L.ED.2d 679 (2020).  

While Espinoza v. Montana Dept of Revenue (above) was being actively litigated, on December 7, 2018, the U.S. Court of Appeals for the Ninth Circuit in Armstrong v. Kadas dismissed a case brought by the Association of Christian Schools International (which included ten religiously affiliated member schools in Montana), who were challenging Montana’s regulation prohibiting religious school participation in its tax-credit scholarship program. The Court concluded that the comity doctrine applied; a case alleging that a state benefits program is unconstitutional should first proceed in state court. The Court therefore found no need to rule on whether the Tax Injunction Act also barred the Association’s claims from federal court. Armstrong v. Kadas, No. 16-35422 (9th Cir. 2019). 

Also, while Espinoza v. Montana Dept of Revenue (above) was being actively litigated, on June 26, 2017, the Montana Quality Education Coalition (MQEC) (composed of public school superintendents, MT Federation of Public Employees, and several school administrative associations) filed MQEC v. State of Montana, alleging that Montana’s tax-credit scholarship program violates the state constitution. After one of MQEC’s primary claims against the program was denied by the U.S. Supreme Court in Espinoza, on September 2, 2020, MQEC filed an amended complaint withdrawing that claim; the state filed a response on September 21, 2020. The case did not move until May 31, 2022, when MQEC filed a motion for summary judgment and the state filed a cross-motion for summary judgment on June 24, 2022. The questions remaining in this case after Espinoza were, a) whether MQEC has standing to sue, and b) whether tax credits are appropriations.  

On December 8, 2022, the Montana First Judicial District Court, Lewis and Clark County, held in MQEC v. State of Montana that Montana’s tax-credit scholarship program does not violate the state constitution’s prohibition against appropriations for educational purposes to any entity not under control of the state. The Court held that tax credits decrease funds entering the general fund; these funds never reach the state treasury, so there can be no appropriation. Therefore, this provision of the state constitution does not apply. Tax credits are not appropriations. MQEC v. State of Montana, MT First Judicial District Court, Cause No. ADV-2017-487.  

(Last updated July 15, 2024)