Montana Education Funding Programs: The Special Needs ESA, Scholarship Tax Credit and 2027 Federal Credit Explained

Quick answer: Montana has two parent-facing education funding programs. The Montana Special Needs Equal Opportunity Education Savings Account (ESA) reimburses parents of children with disabilities under IDEA for approved education costs, but a district court enjoined it in December 2025, a stay let it run only through June 30, 2026, and the state’s appeal is pending before the Montana Supreme Court. Montana also has a donor-funded tax-credit scholarship: taxpayers who give to an approved Student Scholarship Organization (SSO) get a state credit of up to $200,000, and SSOs award scholarships to students. Montana has also opted in to the new federal scholarship tax credit that begins January 1, 2027.

Montana’s approach looks different from its neighbors. Wyoming and Idaho now offer funding open to most families, while Montana’s options are narrower: one program limited to students with disabilities and one scholarship program that depends on private donations and a yearly cap. Parents who start searching for “Montana ESA” often find conflicting information because the ESA has been in court for most of the past year.

This guide sorts out what exists, what is on hold and what you can do now. For how Montana compares with other states, see our guide to education funding programs for parents by state.

Sources: Montana Office of Public Instruction (OPI) Education Savings Account page, parent handbook and June 2025 FAQ; Montana Code Annotated 20-7-1704 (allowable ESA expenses) and 20-5-109 (home school requirements); Montana Department of Revenue, Student Scholarship Organization Credit page; IRS, Federal Scholarship Tax Credit participating states list (updated October 22, 2026); reporting by Montana Express and the Flathead Beacon (October 2026) on the ESA appeal. Rules change with court rulings and legislative sessions. This is general information, not legal or tax advice. Last verified October 2026.

Montana's Programs at a Glance

Program	Type	Who it serves	Current status (October 2026)
Special Needs Equal Opportunity ESA (HB 393)	Education savings account, paid as reimbursements	Montana children identified as having a disability under IDEA, ages 5 to 19 on September 10	Enjoined by a district court; stay expired June 30, 2026; appeal pending at the Montana Supreme Court
Student Scholarship Organization (SSO) tax credit	Tax-credit scholarship	Students who receive scholarships from an approved SSO	Operating; donor credits capped each year
Federal Scholarship Tax Credit (Section 25F)	Federal tax credit for donations to scholarship organizations	Students who meet federal and state rules	Montana has elected to participate; credit starts January 1, 2027

If you want background on how these program types differ, our explainer on ESAs vs. vouchers vs. tax-credit scholarships walks through each model.

The Montana Special Needs ESA

What it is

The Legislature created the Montana Special Needs Equal Opportunity Education Savings Account Program through House Bill 393 in 2023. OPI describes it as “a reimbursement program for parents of a child with a disability” under the federal Individuals with Disabilities Education Act. Unlike ESAs in states such as Arizona, where the state loads money onto a debit-style account, Montana’s version works by reimbursement: parents pay for an approved item or service, then submit receipts to OPI and are paid back from the student’s account balance.

Who qualifies

According to OPI, a qualified student is a Montana resident who, in the current school year, is identified as a “child with a disability” under IDEA and is between the ages of 5 and 19 on September 10. The student also cannot be enrolled in a Department of Corrections commitment program school or the Montana School for the Deaf and Blind. On top of that, the student must meet one of these conditions:

• was counted for school district ANB (average number belonging) funding in the previous school year;
• was enrolled in one of the listed state programs in the previous school year; or
• is eligible to enter kindergarten under Montana law.

OPI’s June 2025 FAQ adds that the student will not be enrolled in a public school during the ESA year and lists students who did not live in Montana the prior year among those who can qualify. During the application, OPI asks for an evaluation report, IEP or private placement service plan completed by a public school evaluation team, plus two proofs of residency.

How much the account holds

There is no single statewide dollar amount. OPI explains that the amount is set by the state’s ANB funding formula and “varies slightly from district to district.” Montana’s administrative rule (ARM 10.16.4001) lists the pieces that make up the figure, including the per-ANB entitlement and the instructional and related services block grant amounts, adjusted by the district’s budget ratio. The final amount is then reduced by 5 percent for administrative costs, as Montana Code 20-7-1709 allows. OPI publishes a district-by-district table of student amounts each year, so the most reliable way to estimate your child’s figure is to look up your resident district on that table.

What the money can pay for

Montana Code 20-7-1704 lists allowable expenses. They include:

• tuition, fees, textbooks, software and instructional materials at a qualified school;
• online, distance learning and technology-delivered courses and programs;
• curriculum and supplemental materials needed for that curriculum;
• tutoring;
• educational therapies such as occupational, behavioral, physical, speech-language and audiology therapy from licensed or certified providers;
• state or nationally recognized assessments, Advanced Placement exams and college entrance exams;
• classes and extracurricular activities provided by a Montana public school;
• tuition, books and fees at an eligible postsecondary institution;
• up to $50 a year in consumable supplies such as paper, pens and markers;
• transportation required for another allowable service;
• fees for a cooperative educational program; and
• other expenses the superintendent approves.

The same statute says account funds cannot be refunded or shared with a parent, and that a student does not have to be enrolled in a private school or an online school to participate. Our article on what ESA funds can pay for compares these rules with other states.

What parents give up

The trade-off matters. Parents sign a contract with the superintendent of public instruction that, among other duties, releases the resident school district from its obligation to provide the child a free appropriate public education and to develop an IEP. OPI also notes that ESA students are treated as parental placements under IDEA. If the child re-enrolls full time in public school, payments to the account stop. Families who rely on district special education services should weigh that carefully and ask the district what services, if any, it offers to parentally placed students.

Application windows

OPI’s ESA page says applications open twice a year, from May 1 to June 1 and from November 1 to December 1, with an online application on the ESA website and paper applications available on request. Because of the court case described below, check the OPI page before assuming a window will open this year.

Why the ESA Is on Hold

In December 2025, Lewis and Clark County District Judge Mike Menahan enjoined HB 393 in a case brought by the Montana Quality Education Coalition and Disability Rights Montana. According to the State’s appeal brief and local reporting, the ruling rested on the Montana Constitution’s appropriations clause, which says no money may be paid out of the treasury without an appropriation made by law. The court found the program’s funding language did not meet that requirement.

Shortly after, the court granted a full stay through the end of the school year. OPI announced that it would keep administering the program, including approved reimbursements, through June 30, 2026. The State and an intervening parent appealed. Montana Express reported in October 2026 that families were unable to use the accounts during the current school year while the Montana Supreme Court considers the case, and the Flathead Beacon reported on October 26, 2026 that the appeal was being briefed with oral arguments expected this fall.

What this means for families:

1. Do not plan the 2026-27 budget around ESA reimbursements unless OPI announces the program has reopened.
2. Keep receipts and records for any services you are paying for; if the program is restored, OPI’s reimbursement rules will apply to submitted claims.
3. Watch the OPI ESA page and OPI news releases for the Supreme Court’s decision.
4. If your child already used the ESA, keep the contract and reimbursement records with your child’s education files.

If your child has an IEP and you are weighing options in several states, our guide to special needs scholarships and ESAs by state lists disability-based programs elsewhere.

The Student Scholarship Organization Tax Credit

How it works

Montana’s other program is funded by donors rather than by the state budget. Individuals and businesses that donate directly to an approved Student Scholarship Organization can claim a Montana tax credit. The SSO then awards scholarships to eligible students to attend instruction at a qualified education provider. Parents do not deal with the Department of Revenue; they apply to an SSO.

The donor credit and the yearly cap

The Montana Department of Revenue explains the main rules:

• The credit equals the donation, up to $200,000 per taxpayer.
• The Department must preapprove each credit. The SSO reports the donation on the state’s Education Donation Portal, and the credit is approved only if aggregate credit remains for the year.
• Credits are first come, first served until the annual aggregate amount is used.
• The aggregate amount was $6 million in 2025. Under the law, if at least 80 percent of a year’s credits are claimed, the next year’s cap rises by 20 percent, which would make it $7.2 million for 2026.
• The credit is nonrefundable but can be carried forward for up to three years.

The Department tracks the remaining aggregate credit on the Education Donation Portal homepage, so you can see how much donor credit is left for the year.

What it means for parents

Because scholarship money comes from donations within a capped credit, the amount any SSO can award depends on how much it raised. Each SSO sets its own application process, deadlines and award amounts within state law. If you are considering a private school, ask the school which SSOs its families use, then contact those organizations directly about timing. Applying early in the year generally gives you the best chance, because organizations award what they have raised.

The 2027 Federal Scholarship Tax Credit in Montana

A new federal program adds a second donor-funded path starting in 2027. The IRS explains that beginning January 1, 2027, individuals may be able to claim a Federal Scholarship Tax Credit of up to $1,700 for certain cash contributions to Scholarship Granting Organizations (SGOs). A state must elect to participate and give the IRS a list of participating SGOs before taxpayers can claim the credit for donations that serve students there.

Montana appears on the IRS list of states that have elected to participate for 2027 (list updated October 22, 2026). For parents, that means more scholarship money may flow through Montana SGOs starting in 2027. The details that will matter most to you, such as which organizations participate, who qualifies and what expenses the scholarships cover, depend on the federal rules and on each SGO, so check the IRS page and the organizations Montana certifies before relying on it.

Montana Options for Homeschooling Families

Montana regulates home schools lightly compared with many states. Under Montana Code 20-5-109, a home school must:

• notify the county superintendent of schools in each school fiscal year of the student’s attendance;
• keep attendance records and make them available to the county superintendent on request;
• provide at least the minimum aggregate hours of instruction set in Montana law; and
• provide an organized course of study that includes the subjects required of public schools as a basic instructional program.

For funding, homeschoolers have fewer options than in states like Arizona or Utah. The SSO scholarships are tied to qualified education providers, so they are mainly a private school tool. The special needs ESA did not require enrollment in a private school, and its list of allowed expenses included curriculum, tutoring and therapies, which is why some homeschooling families of children with disabilities used it. That route is on hold while the appeal is pending.

For more context on how homeschool eligibility works across the country, read can homeschoolers use state education funds.

How to Get Ready Step by Step

1. Decide which setting fits your child: private school, homeschool or a public school with services.
2. If your child has a disability and you are interested in the ESA, gather the IEP or evaluation report, two proofs of residency and your resident district name now, so you can apply quickly if OPI reopens applications.
3. If you are considering private school, ask the school which Student Scholarship Organizations its families use and when those organizations accept applications.
4. Set a reminder to check the IRS participating states page and Montana’s list of SGOs in early 2027.
5. If you homeschool, file your annual notice with your county superintendent and keep attendance records.

Mistakes to Avoid

• Assuming the ESA is open. Many older articles still describe the program as available. Check OPI’s page first.
• Confusing eligible with funded. SSO scholarships depend on donations within an annual cap, so eligibility does not guarantee an award.
• Overlooking the IEP trade-off. ESA participation releases the district from providing a free appropriate public education to your child while enrolled.
• Mixing up state and federal programs. The Montana SSO credit and the federal credit are separate, with different limits and organizations.

Frequently Asked Questions

Does Montana have an education savings account?

Yes, but only for students with disabilities under IDEA, and it is currently enjoined. A district court blocked the program in December 2025, a stay let it operate through June 30, 2026, and the state’s appeal is pending before the Montana Supreme Court.

How much is the Montana ESA worth?

The amount is set by the state’s ANB funding formula and varies by resident school district. OPI publishes a district-by-district table and reduces the final amount by 5 percent for administrative costs.

Can homeschoolers use Montana education funding?

The special needs ESA did not require private school enrollment and covered curriculum, tutoring and therapies, but it is on hold. SSO scholarships are tied to qualified education providers, so they mainly help private school families.

How do I get a Montana tax-credit scholarship?

Apply directly to an approved Student Scholarship Organization. The Department of Revenue lists approved SSOs on the Education Donation Portal, and each organization sets its own application process.

Is Montana participating in the federal school choice tax credit?

Yes. Montana is on the IRS list of states that elected to participate in the Federal Scholarship Tax Credit for 2027, which begins January 1, 2027.

The Bottom Line

Montana’s funding picture in late 2026 comes down to three points. The special needs ESA exists in law but is tied up in court, so families should not count on it until OPI says it has reopened. The SSO tax-credit scholarship is operating, but awards depend on donations within a yearly cap. And the federal scholarship credit, which Montana has opted into, could bring additional scholarship dollars starting in 2027. Keep your documents ready, check official pages before each school year and compare options with our state-by-state guides.