Overview of Tax Credits
Imagine converting a portion of your tax liability into scholarships for students. Tax credit scholarship programs encourage private giving by providing eligible taxpayers with a tax credit for contributions to scholarship organizations. Those contributions fund scholarships that help students access the learning environment that best meets their individual needs. Unlike a standard charitable donation, which provides a deduction that lowers taxable income, these contributions are applied directly against taxes owed.
Interested in learning more about tax credit scholarship opportunities? We’ve put together this guide to explain both Montana’s existing tax credit scholarship program and the new Education Freedom Tax Credit, so you can understand how each program works.
Montana Tax Credit Scholarships
In Montana, the Tax Credit for Contributions to Student Scholarship Organizations allows individuals and corporations to claim a 100% tax credit for donations to approved Student Scholarship Organizations, nonprofits that provide scholarships to families for private school tuition and tutoring.
In practice, that means you can choose to direct a portion of your state tax obligation toward helping students access a private educational option. In other words, you are effectively paying your state taxes by funding scholarships for kids.
Montana’s tax credit scholarships are nonrefundable, meaning the value of the credits are capped by the amount of state taxes the donor owes and capped at a maximum of $200,000. This structure is often considered one of the most hands-off approaches to school choice, since the funding comes from private donations rather than government appropriations, and taxpayers voluntarily decide where a portion of their tax liability goes.
Who Can Donate & Limits
Businesses and individuals with a Montana state income tax liability may contribute up to $200,000, or $400,000 for married couples filing jointly. Unused credits may be rolled over for up to three years.
In 2027, there will be $8.64 million in tax credits available. If the state issues 80% or more of the available credits, the cap will increase by 20% the following year. Since its implementation, all tax credits have been claimed within minutes of the donation portal opening, triggering the automatic increase.
Scholarship Use & Eligibility
The current program in Montana limits scholarships to private school tuition and tutoring services. Funds shall be paid directly from the SSO to the education provider. SSOs award scholarship amounts up to but not exceeding the statewide average per-pupil expenditure calculated in MCA 20-9-570. Scholarships may not be limited to a single education provider or type of provider and must allow eligible students to enroll with any qualified education provider of their parent’s or legal guardian’s choice.
All families who wish for their children to attend a private school or receive tutoring services are eligible to receive a scholarship under Montana law. However, each SSO creates its own eligibility criteria.
Current Approved MT Tax Credit SSOs
The following is a list of Student Scholarship Organizations currently approved and active for the 2026 tax year. SSOs vary in structure and partnerships. Where applicable, participating schools or networks associated with each SSO are listed below. Indented schools indicate current participating education providers for that SSO.
ACE Scholarships SSO, Montana, LLC supports the following schools:
Billings Christian School
Divine Mercy Academy
Foothills Community Christian School
Grace Montessori Academy
Hamilton Christian Academy
Helena Christian School
Heritage Academy, Incorporated
Mission Valley Christian Academy
Petra Academy
Sacred Heart Elementary School
St Andrew School
St Jude Thaddeus School
St. Francis Elementary & Middle School
Stillwater Christian School
Sussex School
Trinity Lutheran Classical School
Valley Christian School
Trinity Lutheran School- Billings
Trinity Lutheran School- Kallispell
Heritage Christian School
Kootenai Valley Christian School
St.Francis Catholic School/Billings Central Catholic High School
Sunrise Montessori School
Trinity Lutheran Classical School
Conrad Christian School
Five Falls Christian School
Harvest Christian Academy
Manhattan Christian School
St. Mary’s Catholic School
St. Patrick’s Academy High School
St. Patrick’s Academy West
Billings Central Catholic
Teton Adventist Christian School
Treasure State Academy
Yellowstone Classical Christian Academy
Central Education Foundation of Silver Bow supports the following schools:
ST. Andrews School
Missoula Christian Montessori
Butte Central Catholic Schools
Elevation Foundation Inc supports the following schools:
Fairfield Mennonite Church
Jefferson Valley Mennonite School
Missoula Christian Montessori School
Clark Fork Christian Fellowship
Huckleberry Academy
St Joseph’s Elementary School
Cornerstone Mennonite Church
Elk Creek Mennonite Church
Treasure State Academy
Great Falls Central Catholic High School
Holy Spirit Catholic School doing business as St. Patrick’s Academy
Kalispell Montessori Center Inc
Missoula Catholic Schools Foundation supports the following schools:
St. Joseph Elementary and Middle School
Loyola Sacred Heart High School
Missoula Christian Montessori School
Montana Leadership Foundation supports the following schools:
Billings Central Catholic High School
Loyola Sacred Heart High School
Missoula Christian Montessori School
Mountain View Christian School
Saint Francis Catholic School
St. Andrew Catholic School
St. Joseph Elementary and Middle School
St. Mary’s Catholic School
St. Patrick’s Academy High School
Sussex School
Our Lady of Lourdes Catholic School
Saint Matthew Parish Series 535, LLC supports the following schools:
Heritage Academy
St. Matthew’s Catholic School
Stillwater Christian School
Woodland Montessori School Foundation
Detailed information about the number of tax credits and the amount of donations to each SSO can be found on the Department of Revenue’s donation portal. To learn more about becoming an approved SSO or more detailed information as a donor, visit the Department of Revenue’s Guide to Tax Credits for Contributions to Student Scholarship Organizations.
More Resources
Department of Revenue’s Guide to Tax Credits for Contributions to Student Scholarship Organizations
Department of Revenue Donation Portal for SSOs
Legal Background to Montana’s Tax Credit program
Please note that the information provided here is subject to change and not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited and any examples are for illustrative purposes only.
Federal Education Freedom Tax Credit Scholarships
In 2025, Congress passed the first-ever federal vehicle for education freedom, called the Education Freedom Tax Credit (EFTC). Similar to the Montana Tax Credit Scholarship program, any taxpayer may donate to a scholarship granting organization (SGO) and receive a dollar-for-dollar tax credit against their federal tax liability, up to $1,700. Montana’s Governor has opted-in and will curate a list of SGOs after the federal rulemaking process is finished. All American taxpayers can contribute to an SGO in any state whose governor has opted into the program.
Who Can Donate
Beginning in tax year 2027, individual taxpayers can claim a credit of up to $1,700 for donations made to qualifying Scholarship Granting Organizations (SGO). These tax credits do not expire, there is no limit to the number of tax credits available every year, and excess credits can be carried forward for up to 5 years. This credit is not available to corporations, but they can participate by informing employees of the opportunity to donate to an SGO.
Scholarships
As outlined in the Education Freedom Tax Credit law, scholarships will be offered to eligible K-12 students who live in participating states and qualify for enrollment in a public school. Additionally, the student’s family household income must not exceed 300% of the area median income, as determined by the U.S. Department of Housing and Urban Development. The table below gives a sampling of income limits for several Montana counties.
Use the interactive infogram to check your county’s income limits:
Scholarship funds can be used toward educational expenses incurred at public schools, charter schools, private schools or religious schools including:
- Tuition and fees
- Textbooks and educational supplies
- Academic tutoring services
- Computer technology, equipment, or internet access
- Specialized educational therapies such as speech, occupational, physical, and behavioral
- Uniforms, transportation, and extended day programs required or provided by the school
Each organization determines their own award amounts and may add additional eligibility requirements.
Current Approved SGOs
State governors are charged with providing a list of approved SGOs that meet the qualifications to the IRS. We will update this guide when information becomes available in late 2026.
More Resources
Guide to Starting a Scholarship Granting Organization
What the Federal Tax Credit Means for Families
ACE Scholarship Guidance on EFTC
Please note that the information provided here is subject to change and not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited and any examples are for illustrative purposes only.
