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New Montana tax credits for private-school scholarships hit $1M cap

For the 2022 fiscal year, an enhanced state income-tax credit for gifts to private-school scholarships has reached its $1 million limit — less than three weeks into the year.

According to state tax authorities, the $1 million maximum for the credits was surpassed on Jan. 19, with 60 individual gifts and nine company donations taking use of the credit.


The funds were distributed to seven nonprofit student-scholarship groups in Montana that assist students attending private K-12 institutions, many of which are religiously related.

ACE Scholarships of Montana received $486,000 in contributions, while Missoula Catholic Schools received $352,000.


For this year, those who make the gifts are eligible for a state income tax credit of up to $200,000. For this year, the total maximum of all qualified tax deductions for student-scholarship organisations is $1 million. The limit will be raised to $2 million next year.


Last year, the Montana Legislature’s Republican majority boosted the maximum per-person tax credit from $150 to $200,000. No Democratic legislators voted in favour of the bill, claiming that the vastly increased credit would basically divert public funds away from public schools in order to support private schools.


However, the legislation also provided for a tax credit of up to $1 million for gifts to public schools to fund “innovative educational projects” – and the ceiling for 2022 was achieved in less than six minutes on the first working day of the year.


To meet the limit on Jan. 3, twenty-three individuals provided money to ten public schools in nine Montana cities and villages.


The following are the other private-school scholarship groups that received tax-deductible gifts, along with their amounts:


$69,000 for Kalispell’s St. Matthew’s Catholic School.

$61,000 for Holy Spirit Catholic School in Great Falls.

$12,500 to St. Mary’s Catholic School in Livingston.

Helena’s Intermountain Children’s Services, $12,000.

Livingston’s The Way Christian School, $7,000.

After receiving contributions, student-scholarship groups must obtain “pre-approval” of the amount from the state Revenue Department in order to be eligible for the tax credit.


The $1 million thresholds was surpassed at 6:20 p.m. on Jan. 19 with 69 pre-approved gifts, according to state revenue authorities.


Following a significant 2020 Supreme Court ruling that affirmed the tax credit’s usage to aid religion-affiliated institutions, the credit was increased from a maximum of $150 to $200,000. The whole tax credit was knocked down by the Montana Supreme Court, which ruled that it was an illegal use of public money to help religious groups. With a 5-4 decision, the nation’s supreme court overturned that directive.