The race will be on for donors to support innovative education in public schools or private school scholarships and get dollar-for-dollar tax credits before a statewide cap is reached.

Beginning Jan. 3, a Montana taxpayer, estate or business may donate up to $200,000 for the Innovative Education Program tax credit or Student Scholarship Organization (SSO) tax credit. This amount is a significant increase from a previous $150 limit. The expanded credit comes after Gov. Greg Gianforte signed House Bill 279 in the spring.

The catch is that statewide, each tax credit program has a $1 million cap and tax credits are on a first-come, first-served basis.

Some school district officials anticipate the caps will be reached within the day, if not hours. People may still donate to schools once the thresholds are reached, however, they will not receive the tax credit.

In the 2023 tax year, the aggregate amounts each increase to $2 million. Each year thereafter, a formula will be applied that if 80% of the previous year’s credits are claimed, the aggregate amount will increase by 20%. If not reached, the amount remains the same as the previous year.

Money donated to a specific school through the Innovative Education Program is intended to provide supplemental funding and how it may be spent is fairly broad. It may be used for post-secondary credit or career certifications; work-based learning partnerships; services and equipment for students with disabilities; technology and other “transformational and advanced learning opportunities” for students.

“It’s pretty significant what we can do with those funds,” Kalispell Public Schools Superintendent Micah Hill said, noting that donations received go into the district’s miscellaneous fund.

TO DONATE, taxpayers or businesses must donate directly to a public school or SSO that has registered to participate through the Montana Department of Revenue. A list of contact information is available at the department’s Education Donations portal at https://svc.mt.gov/dor/educationdonation2. People may also view how much tax credit is available, pending and claimed.

Once donors contact a public school or SSO, they will be asked to provide the following information: donation amount, name or business name, last four digits of a Social Security number or federal employer identification number, mailing address, physical address and email address.

Schools and SSOs will be responsible for submitting the information through the portal to reserve tax credits for taxpayers. Once pre-approved, donors will receive a confirmation number and receipt to include when filing 2022 taxes.

QUESTIONS ON how equitable the tax credit programs are have been raised — and not just in the great debate of public school funding and school choice.

In regard to Innovative Education Program tax credit, some school officials contend large school districts, or ones in affluent communities with many corporations, may have a leg up in garnering donations as opposed to small districts in rural communities.

“Part of my concern is a community like Big Sky, or Bozeman, probably a more affluent community — or a city like Billings — has a lot more mass in what they could potentially generate,” Hill said.

Hill said it also goes for Kalispell in comparison to its smaller, partner school districts whose students go on to attend Glacier or Flathead high schools.

“The challenge is — and I know speaking to other AA districts everybody is getting the word out — I represent Kalispell Public Schools, but I also have a heart for our partner districts and I could really see, on Jan. 3, when this opens up, it will really be a race to the top,” Hill said, later adding, “It puts schools in a competitive atmosphere for each other for funding.”

For more information about the tax credits visit https://bit.ly/3JmVGG3.

Reporter Hilary Matheson may be reached at 406-758-4431 or [email protected].