Bill > HB859

This bill creates a new income tax credit for cash contributions to community improvement organizations (CIOs), which are defined as tax-exempt 501(c)(3) nonprofit organizations that fundraise or distribute funds to enhance public facilities owned by state or local government. The tax credit allows individual and corporate taxpayers to claim a credit equal to their cash contribution, not exceeding either 10% of their Montana taxable income or $3,000. For pass-through entities like small businesses and partnerships, the credit will be attributed to shareholders or partners proportionally. The credit can be carried forward for up to three years if not fully used in the year of contribution and cannot exceed the taxpayer's income tax liability. There is an aggregate statewide limit on these credits, starting at $2 million in 2026 and increasing to $5 million in 2027, with a potential additional 20% increase if 80% of the aggregate limit is used in contributions. To claim the credit, taxpayers must obtain a preapproval receipt from the CIO, and the contribution cannot be simultaneously claimed as a charitable deduction. The bill's purpose is to encourage donations to community improvement organizations while giving taxpayers more control over how their tax dollars are used. The tax credit will become effective January 1, 2026, and apply to income tax years beginning on or after that date.

Budget and Finance

https://bills.legmt.gov/#/laws/bill/2/LC4176