Innovative Educational Program Credit

The Innovative Educational Program (IEP) Tax Credit is available to taxpayers who donate to Montana public school districts (PSDs) to provide supplemental funding for innovative educational programs.

Eligibility

You may qualify if you are:

  • An individual taxpayer, or
  • A business taxpayer

Requirements:

  1. Donations must be made directly to a public school district.
  2. The department must preapprove the credit before it can be claimed.

Preapproval Process:

  • The public school district reports your donation on the Education Donation Portal to reserve your credit.
  • If enough tax credits remain and your donation does not exceed $200,000 for the tax year, the credit will be preapproved.
  • The PSD will provide you with:
    • A tax credit receipt showing the approved credit amount, and
    • A confirmation number.
  • You must include both the tax credit receipt and confirmation number when filing your return.

Benefit

  • The credit is equal to the amount of the donation, up to $200,000.
  • Credits are available on a first-come, first-served basis until the total credits claimed reaches the threshold for the year.

Annual Credit Limits:

In 2025, the aggregate amount of the available credit is $6,000,000. If 80% of 2025's credits are claimed, the aggregate amount will increase by 20% to 7,200,000 in 2026. If it is not met, the aggregate amount remains the same as the previous year. The credit's aggregate threshold is tracked on the Education Donation Portal homepage.

Carryover

The credit is nonrefundable but may be carried forward for up to three years.

Resources

Learn more about the IEP Tax Credit in the Tax Credits for Qualified Education Contributions Guide.

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