Donors have limited window to support schools and get dollar-for-dollar tax credits

Montana schools are seeking to secure a slice of $5 million in donations — and for donors, to get dollar-for-dollar tax credits — for supporting innovative education or scholarships.

A Montana taxpayer, estate, trust, or business may donate up to $200,000 for the Innovative Education Program tax credit to benefit public schools, or the Student Scholarship Organization (SSO) tax credit to benefit private schools. Each program is allotted $5 million.

Tax credits are on a first-come, first-served basis. Schools are tasked with entering donors' information through an online portal to reserve tax credits for taxpayers. The portal opens at 10 a.m. Jan. 17.

Money donated to a school district through the Innovative Education Program is intended to provide supplemental funding. How it may be spent is fairly broad. Money may be used for transformational learning, advanced opportunities, technology, services and equipment for students with disabilities; post-secondary credit or career certifications; work-based learning partnerships; and capital improvements and equipment needed to support innovative educational programs.

To participate, taxpayers and 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. Once entered into the portal, the Montana Department of Revenue uses the information to preapprove tax credits. Once preapproved, donors will receive a confirmation number and receipt to include when filing taxes. Credit may be carried over for up to three years.

Whitefish School District asks donors to fill out a form posted online at www.whitefishschools.org and drop it off with a donation to the district office located at 600 E. Second St., by 4:30 p.m. Jan 16.

QUESTIONS ABOUT the equitableness of the tax credit programs, have been raised by school officials when the portal opened in January 2022 after significant changes were made to House Bill 279 by the 2021 Legislature. At the time, $1 million was up for grabs statewide and there wasn’t a limit to how much money one school district could receive. Within minutes, the Innovative Education Program tax credits were claimed by less than a dozen districts. 

Some school officials also contended that large school districts, or ones in affluent communities, had a leg up in garnering donations as opposed to smaller districts or ones located in rural communities. 

In 2023, when the aggregate amount was raised to $2 million, Kalispell Public Schools claimed $66,500 for its elementary district with seven donations and $40,200 for its high school district with four donations. Smaller school districts such as Somers-Lakeside secured three donations totaling $35,100, and Evergreen, $10,000 from one donation. Meanwhile, Big Sky School District claimed $895,500 that year with seven donations.

In 2023, House Bill 408 limits the amount of money school districts can retain through the Innovative Education Program. Under House Bill 408, a school district cannot keep donations exceeding either “the greater of $50,000 or $15% of the district’s maximum general fund budget,” or “20% of the total aggregate amount.” Donations exceeding a school district’s limit will be redistributed to other school districts. 

Each year, a formula will be applied that if 80% of the previous year’s credits are claimed, the total aggregate amount will increase by 20%. If not reached, the amount remains the same as the previous year.

For more information about the tax credits visit https://bit.ly/3JmVGG3 or call the Department of Revenue at 444-6900. Donors may also contact participating school districts listed on the portal website.