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Reports from Policy Analysts

Scholarship Tax Credit

Submitted On: Wednesday, June 28, 2017

Analyst: Baldwin, Anna

Montana remains a staunchly pro-public school state. Although a strict law allowing for charter schools exists and at least one district has begun working toward founding one, no charter schools currently operate in the state. Voucher programs are similarly hamstrung.

However, a recent court ruling may change that. In 2015 the state legislature passed a bill allowing for a tax credit up to $150 for any individual or corporation who makes a same-amount contribution to a scholarship organization. The organization can then provide scholarships for students to attend any school or receive tutoring.

In December 2015, the Montana Department of Revenue disallowed scholarship organizations from disbursing the funds for students on the basis that they might be used toward a religious school, thus blurring the line between church and state. In 2016, the Department of Revenue’s rule was challenged in court and in May 2017 it was voided.

Advocates of the credit see the court’s decision as a victory not only for them, but also for school choice in general. Opponents say the credits amount to an direct state payment to a religious institution, which is unconstitutional. Opponents plan to appeal the lower court’s ruling.



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