Montana LC 50: Establish subtrust within the coal trust to increase educational tax credits

Bill Text

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69th Legislature 2025 LC0050.1
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1 _____________ BILL NO. _____________
2 INTRODUCED BY _________________________________________________
3
4 A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING STATE FINANCE LAWS RELATED TO
5 THE COAL SEVERANCE TAX TRUST FUND AND EDUCATIONAL TAX CREDITS; ESTABLISHING AN
6 EDUCATIONAL OPPORTUNITY FUND WITHIN THE COAL SEVERANCE TAX TRUST FUND AND
7 UTILIZING A PORTION OF THE EARNINGS FROM THE FUND TO INCREASE THE AGGREGATE LIMITS
8 FOR EDUCATIONAL TAX CREDITS; PROVIDING FOR A FUNDS TRANSFER; REMOVING THE SUNSET
9 FROM THE EDUCATIONAL TAX CREDIT PROGRAMS; AMENDING SECTIONS 15-30-3110, 15-30-3111,
10 AND 17-5-703, MCA; AMENDING SECTION 24, CHAPTER 480, LAWS OF 2021, AND SECTION 7,
11 CHAPTER 558, LAWS OF 2023; REPEALING SECTION 33, CHAPTER 457, LAWS OF 2015, SECTION 20,
12 CHAPTER 480, LAWS OF 2021, AND SECTION 12, CHAPTER 558, LAWS OF 2023; AND PROVIDING AN
13 EFFECTIVE DATE.”
14
15 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
16
17 Section 1. Section 15-30-3110, MCA, is amended to read:
18 "15-30-3110. (Temporary) Credit for providing supplemental funding to public schools --
19 innovative educational program. (1) Subject to subsection (4), a taxpayer or corporation is allowed a credit
20 against the tax imposed by chapter 30 or 31 for donations made to a school district for the purpose of providing
21 supplemental funding to the school district for innovative educational programs. The amount of the credit
22 allowed is equal to the amount of the donation, not to exceed $200,000.
23 (2) (a) If the credit allowed under this section is claimed by a small business corporation, a pass-
24 through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the
25 same proportion as used to report the entity's income or loss.
26 (b) A donation by an estate or trust qualifies for the credit. Any credit not used by the estate or trust
27 may be attributed to each beneficiary of the estate or trust in the same proportion used to report the
28 beneficiary's income from the estate or trust for Montana income tax purposes.

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69th Legislature 2025 LC0050.1
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1 (3) The credit allowed under this section may not exceed the taxpayer's income tax liability but
2 may be carried forward 3 years. The entire amount of the tax credit not used in the year earned must be carried
3 first to the earliest tax year in which the credit may be applied and then to each succeeding tax year.
4 (4) (a) (i) The aggregate amount of tax credits allowed under this section is $2 million per year in
5 tax year 2023 and $5 million per year in tax year 2024 and subsequent tax years except as provided in this
6 subsection (4)(a).
7 (ii) Beginning in 2024, by December 31 of each year, the department shall determine if 80% of the
8 aggregate limit provided for in subsection (4)(a)(iii) in donations was preapproved by the department. If this
9 condition is satisfied, the aggregate amount of tax credits allowed for succeeding tax years must be increased
10 by 20% for the succeeding tax years plus an amount equal to 50% of the earnings transferred to the general
11 fund from the educational opportunity fund within the coal severance tax trust pursuant to 17-5-703.
12 (iii) If the aggregate limit is increased in any tax year, the department shall use the new limit as the
13 base aggregate limit for succeeding tax years until a new aggregated limit is established under the provisions of
14 subsection (4)(a)(ii).
15 (b) The aggregate limit under this subsection (4) applies to the year in which a donation is made
16 regardless of whether the full credit is claimed in that tax year or carried forward.
17 (5) A credit is not allowed under this section with respect to any amount deducted by the taxpayer
18 for state tax purposes as a charitable contribution to a charitable organization qualified under section 501(c)(3)
19 of the Internal Revenue Code, 26 U.S.C. 501(c)(3). This section does not prevent a taxpayer from:
20 (a) claiming a credit under this section instead of a deduction; or
21 (b) claiming an exclusion, deduction, or credit for a charitable contribution that exceeds the amount
22 for which the credit is allowed under this section.
23 (6) (a) On receiving a donation under this part, a school district shall seek preapproval, in a
24 manner prescribed by the department, that the amount of tax credit sought by the taxpayer is available under
25 the aggregate limit under subsection (4).
26 (b) On preapproval by the department, a school district shall issue a receipt, in a form prescribed
27 by the department, to each contributing taxpayer indicating the value of the donation received and preapproval
28 of the tax credit.

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69th Legislature 2025 LC0050.1
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1 (c) A taxpayer shall provide a copy of the receipt when claiming the tax credit.
2 (7) (a) A