Montana Public Radio

New Law Increases Tax Credit For Scholarship Donations, Relaxes Restrictions On Private Schools

May 12, 2021

Gov. Greg Gianforte Wednesday signed into law a significant increase to a tax credit for donors to school choice scholarship programs. The program benefits both public and private schools, but the bill eases restrictions on what private schools are required to do in order to receive funding. 

Donors to school scholarship programs will now get a dollar-for-dollar tax credit up to $200,000, an increase over the $150 tax credit previously on the books. The state will credit up to $1 million in donations this year, and that limit will double in 2022. 

Erica Smith is an attorney with the Virgina-based Institute for Justice. She testified in favor of the bill.

“One thing we would like to see in the future is the overall amount that can be donated get even higher.”

The law firm led an effort all the way to the U.S. Supreme Court to keep private schools in the tax credit program. The Supreme Court overturned Montana’s high court ruling that religious private schools participating in the program violated the state Constitution. 

Lance Melton with the Montana School Board Association isn’t happy with the increased tax credit, although public schools stand to see some of the money. Something he also doesn’t like is that the law relaxes standards for private schools receiving scholarship funding.

“The most important and probably most significant piece of accountability on the private side was that you had to find some nationally recognized standardized assessment and make the results available to the parents of the children that are coming to your school.”

He adds there are several restrictions on how public schools can spend the money they receive from the tax credit program, but says there’s few for private schools.