Senate Bill No. 391

Introduced By _______________________________________________________________________________

A Bill for an Act entitled: "An Act providing an individual income tax credit for qualifying postsecondary education expenses paid by an individual for a dependent who is a full-time student in the Montana university system or at a Montana private college; allowing a graduated amount of tax credit based on the number of dependents; and providing an applicability date."

Be it enacted by the Legislature of the State of Montana:

NEW SECTION. Section 1.  Postsecondary education tax credit. (1) There is a credit against the taxes otherwise due under this chapter for qualifying postsecondary education expenses paid by an individual for a dependent who is a full-time student in the Montana university system or at a Montana private college.

(2) Postsecondary education expenses that qualify for the credit under this section are amounts paid as tuition and fees by an individual for a dependent.

(3) The amount of the credit for qualifying postsecondary education expenses is as follows:

(a) up to $500 for the first dependent;

(b) 60% of $500 for the second dependent; and

(c) 40% of $500 for the third and any subsequent dependents.

(4) The credit allowed under this section may not exceed the taxpayer's income tax liability.

(5) There is no carryback or carryforward of the credit permitted under this section, and the credit must be applied in the year in which the qualifying expenses are paid, as determined by the taxpayer's accounting method.

(6) For the purposes of this section, "dependent" means a person who is less than 24 years of age at the close of the calendar year, who is a full-time student in the Montana university system or at a Montana private college, and who may be claimed as a dependent by the taxpayer.

(7) For the purposes of this section, "Montana private college" has the same meaning as provided in 15-30-163(3)(b).

NEW SECTION. Section 2.  Codification instruction. [Section 1] is intended to be codified as an integral part of Title 15, chapter 30, part 1, and the provisions of Title 15, chapter 30, part 1, apply to [section 1].

NEW SECTION. Section 3.  Applicability. [This act] applies to tax years beginning after December 31, 1997.

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