Sponsor proposes community-directed tax credit to steer donations toward local projects

Representative Shane Clacken introduced House Bill 859, the Montana Community Improvement Tax Credit Act, proposing a refundable income tax credit to encourage donations to volunteer organizations that finance public facilities such as pools, libraries and playgrounds.

Clacken said the credit would be limited to the lesser of $3,000 or 10% of taxable income per taxpayer and would include an initial aggregate cap (the sponsor described a $4 million starting cap). The bill would require organizations to seek preapproval from the Department of Revenue and would prohibit stacking the credit with a federal charitable deduction for the same donation, Clacken said. He also said the credit was intentionally narrow to apply to 501(c)(3) organizations without paid staff, to keep the program “grassroots.”

Supporters, including Lewistown resident Kevin Kepler, described grassroots fundraising examples such as “friends of the pool” efforts and said the credit would be another tool to leverage local giving. Opponents raised concerns about the bill’s automatic cap adjustment mechanism: Bob Storey of the Montana Taxpayers Association cautioned that a provision that automatically increases the cap once donations reach a threshold could remove legislative oversight over the program’s cost and recommended a fixed cap with further legislative review if more capacity is needed.

Jake Ford of the Department of Revenue said implementing the program would require the department to create a registration portal and to track donations against the aggregate cap; he said charitable organizations would likely register and log donations so the department could close the portal when the cap was reached.

Committee members asked procedural questions about how and when organizations would register donations, whether the portal would close midyear and whether the cap cited by the sponsor matched the statutory text. Representative Estman specifically asked whether the aggregate cap in the bill is $2 million per year, which Ford said the department would need to track; the exchange highlights a discrepancy between the sponsor’s description (an initial $4 million cap) and committee questions referencing a $2 million figure in the bill text.

Why it matters: HB 859 would redirect part of state tax policy toward incentivizing private giving for local public facilities, changing the distribution of philanthropic resources and carrying a potential fiscal impact tied to the aggregate cap and the credit’s uptake.

What’s next: The bill was heard in committee; committee members and the Department of Revenue discussed implementation mechanics, and the measure may be scheduled for committee action.

Quotes "This bill changes that. It offers tax credit up to $3,000 or 10% of taxable income whichever is less," Representative Shane Clacken said in his introduction. "It gives us a tool in local communities to raise and have local people give money to local projects," said Kevin Kepler, a proponent from Lewistown.

Ending Department of Revenue staff said they would need to design a portal and registration process to operate the program if the committee advances it; opponents urged clear legislative limits on automatic cap increases to retain oversight.