Montana Code 15-30-3111. Qualified education tax credit for donations to student scholarship organizations
15-30-3111. (Temporary) Qualified education tax credit for donations to student scholarship organizations. (1) Subject to subsection (4), a taxpayer or corporation is allowed a credit against the tax imposed by chapter 30 or 31 for donations made to a student scholarship organization. The donor may not direct or designate donations to a parent, legal guardian, or specific qualified education provider. The amount of the credit allowed is equal to the amount of the donation, not to exceed $200,000.
Terms Used In Montana Code 15-30-3111
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Department: means the department of revenue provided for in 2-15-1301. See Montana Code 15-30-3102
- Donation: means a gift of cash. See Montana Code 15-30-3102
- Donor: The person who makes a gift.
- Guardian: A person legally empowered and charged with the duty of taking care of and managing the property of another person who because of age, intellect, or health, is incapable of managing his (her) own affairs.
- Pass-through entity: has the meaning provided in 15-30-2101. See Montana Code 15-30-3102
- Qualified education provider: means an education provider that:
(a)is not a public school;
(b)(i) is accredited, has applied for accreditation, or is provisionally accredited by a state, regional, or national accreditation organization; or
(ii)is a nonaccredited provider or tutor and has informed the child's parents or legal guardian in writing at the time of enrollment that the provider is not accredited and is not seeking accreditation;
(c)is not a home school as referred to in 20-5-102(2)(e);
(d)satisfies the health and safety requirements prescribed by law for private schools in this state; and
(e)qualifies for an exemption from compulsory enrollment under 20-5-102(2)(e) and 20-5-109. See Montana Code 15-30-3102
- Small business corporation: has the meaning provided in 15-30-3301. See Montana Code 15-30-3102
- State: when applied to the different parts of the United States, includes the District of Columbia and the territories. See Montana Code 1-1-201
- Student scholarship organization: means a charitable organization in this state that:
(a)is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code, 26 U. See Montana Code 15-30-3102
- Taxpayer: has the meaning provided in 15-30-2101. See Montana Code 15-30-3102
(2)(a) If the credit allowed under this section is claimed by a small business corporation, a pass-through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the same proportion as used to report the entity’s income or loss.
(b)A donation by an estate or trust qualifies for the credit. Any credit not used by the estate or trust may be attributed to each beneficiary of the estate or trust in the same proportion used to report the beneficiary’s income from the estate or trust for Montana income tax purposes.
(3)The credit allowed under this section may not exceed the taxpayer’s income tax liability but may be carried forward 3 years. The entire amount of the tax credit not used in the year earned must be carried first to the earliest tax year in which the credit may be applied and then to each succeeding tax year
(4)(a) (i) The aggregate amount of tax credits allowed under this section is $2 million per year in tax year 2023 and $5 million per year in tax year 2024 and subsequent tax years except as provided in this subsection (4)(a).
(ii)Beginning in 2024, by December 31 of each year, the department shall determine if 80% of the aggregate limit provided for in subsection (4)(a)(iii) in tax credits was preapproved by the department. If this condition is satisfied, the aggregate limit of tax credits allowed must be increased by 20% for the succeeding tax years.
(iii)If the aggregate limit is increased in any tax year, the department shall use the new limit as the aggregate limit for succeeding tax years until a new aggregated limit is established under the provisions of subsection (4)(a)(ii).
(b)The aggregate limit under this subsection (4) applies to the year in which a donation is made regardless of whether the full credit is claimed in that tax year or carried forward.
(5)A credit is not allowed under this section with respect to any amount deducted by the taxpayer for state tax purposes as a charitable contribution to a charitable organization qualified under section 501(c)(3) of the Internal Revenue Code, 26 U.S.C. § 501(c)(3). This section does not prevent a taxpayer from:
(a)claiming a credit under this section instead of a deduction; or
(b)claiming an exclusion, deduction, or credit for a charitable contribution that exceeds the amount for which the credit is allowed under this section.
(6)(a) On receiving a donation under this part, a student scholarship organization shall seek preapproval, in a manner prescribed by the department, that the amount of tax credit sought by the taxpayer is available under the aggregate limit under subsection (4).
(b)On preapproval by the department, a student scholarship organization shall issue a receipt, in a form prescribed by the department, to each contributing taxpayer indicating the value of the donation received and preapproval of the tax credit.
(c)A taxpayer shall provide a copy of the receipt when claiming the tax credit. (Terminates December 31, 2029–sec. 20, Ch. 480, L. 2021, sec. 7, Ch. 558, L. 2023, sec. 12, Ch. 558, L. 2023.)