2023 Montana Legislative Roundup – Changes to Several Montana Income Tax Credits – Tax News You Can Use

December 27, 2023

This article is a part of our 2023 Legislative Roundup series, which brings you updates about changes to Montana  income tax laws made during the 68th Montana Legislature. 

Four existing Montana income tax credits were updated during the 68th Montana Legislature.

Montana Earned Income Tax Credit

The Montana Earned Income Tax Credit will increase, beginning with Tax Year 2024. Currently, the credit is equal to 3 percent of the federal Earned Income Tax Credit. In 2024, the amount will increase to 10 percent of the federal credit.

The credit is still refundable, meaning that if it exceeds the total amount of taxes owed, the taxpayer will receive the difference. Qualifications to claim the credit were unchanged. Eligible taxpayers will see the increase on their 2024 Form 2, filed in 2025. More information about the Montana Earned Income Tax Credit is here.

Qualified Education Contribution Credit

The cap on the amount of credits available for the Qualified Education Tax Credits for contributions to student scholarship organizations and public school districts will increase to five million dollars in Tax Year 2024. While the cap increased, the credit amount remains unchanged; it will continue to be nonrefundable and equal to the amount of the contribution, up to $200,000, with a three year carryover.

The calculation of how the cap increases also did not change. If 80 percent of the credit cap is met, the credit cap increases by 20% in 2025 and subsequent years. Our Tax Credits for Qualified Education Contributions Guide has more information.

Trades Education and Training Credit

Beginning with Tax Year 2023, the list of trades that qualify for the Trades Education And Training Credit was expanded to include nine more types of employment. This credit is available to employers paying expenses associated with training or education for their employees to attend training for a trades profession. The credit is 50% of the cost of education, up to $2,000 per employee, not to exceed $25,000.

The list already included traditional trades, such as plumbers, electricians, construction workers, etc. Newly included trades, for purposes of the credit, include extraction-related professions, IT-related professions, and medical and dental professions, to name a few. More information about the Trades Education and Training Credit is here.

Qualified Endowment Credit

Beginning in Tax Year 2024, the Qualified Endowment Credit, a tax credit available to taxpayers making charitable donations to qualified endowments, will increase. The credit will be equal to 40% of the present value of a planned gift, up to $15,000. Businesses and estates are eligible for a credit of 20% of an outright gift, up to $15,000. Currently, the maximum amount of the credit is $10,000. Learn more about the Qualified Endowment Credit is here.