Unlock the full power of your charitable giving and support local students through Montana’s generous tax-credit program. By choosing to redirect the state taxes you already owe, you can directly fund scholarships that help families afford private and faith-based K-12 education.
State tax credit details
Montana offers one of the most robust tax-credit programs in the country. Individual donors can redirect up to $200,000 annually, and married couples filing jointly can redirect up to $400,000 per year. For these redirected funds, you will receive a 100% dollar-for-dollar state tax credit directly reducing your state income tax liability. This allows you to keep your tax dollars local and choose exactly how they are used to support K-12 students.
Applicable federal rules
Under the federal Section 25F program launching in January 2027, individual taxpayers can claim an additional federal tax credit of up to $1,700 for redirects made to certified scholarship granting organizations. However, federal rules include an offset clause: your federal tax credit must be reduced by the amount of any state tax credit claimed for the same redirect. Because Montana offers a 100% state tax credit, if your state tax credit is $1,700 or more, the federal tax credit will not apply to those same redirected dollars.
FAQs for families and donors
Who qualifies for these scholarships?
Under the federal framework, scholarships support K-12 students whose household income does not exceed 300% of the area median gross income. SGOs are responsible for verifying family size and household income, but foster children automatically satisfy this requirement without needing separate verification.
What expenses do the scholarships cover?
Scholarships can be used for qualified K-12 education expenses. This includes tuition, school fees, textbooks, school uniforms, and transportation, as well as supplementary services like academic tutoring and special needs support.
How are redirected funds managed?
To ensure complete transparency, scholarship granting organizations must keep redirected funds in segregated accounts. At least 90% of all receipts must be spent directly on student scholarships, and organizations must undergo annual independent audits.
