The court said that a Montana tax credit program that directed money to private schools could not exclude religious schools.
"A state does not need to subsidize private education. But once a state decides to do so, it cannot disqualify some private schools just because they are religious," Roberts wrote in the majority opinion.
Tuesday's opinion is a great victory for supporters of school choice programs, a hallmark of the Trump administration, and will also encourage other states to push similar programs.
The ruling comes when supporters of religious liberty, including the Trump administration, have expected the solidified conservative majority of the court to emphasize that the free exercise clause of the Constitution requires neutrality towards religion. Three low-income mothers had tried to use funds from a state initiative for the religious education of their children.
Education Secretary Betsy DeVos called the ruling "a historic victory for America's students and all those who believe in fundamental justice and freedom."
It builds on Roberts' previous decisions that allow for greater government involvement with religion under the First Amendment, which says the government "will not enact any law that respects an establishment of religion or prohibits the free exercise of religion" .
Roberts emphasized in the Montana case that "we have repeatedly argued that the Establishment Clause is not offended when observers and religious organizations benefit from neutral government programs."
CNN Supreme Court analyst and professor at the University of Texas School of Law Stephen Vladeck said Tuesday's decision "represents a significant step in the direction of federal constitutional protections for religious schools."
"Today's ruling seems to suggest that there is virtually no gray area, and that a state can only refuse to extend neutral tax credits to religious schools when extending the credit itself would be unconstitutional," said Vladeck.
A "historic victory" for students, conservatives say
DeVos, a longtime advocate of religious schools, called the ruling a "turning point."
"This decision represents a turning point in the sad and static history of American education, and will generate a new beginning in education that focuses first on students and their needs," DeVos said in a statement. "I ask all states now to take advantage of the extraordinary opportunity to expand all educational options in every school to every student in the United States."
The White House also praised the ruling, and press secretary Kayleigh McEnany said in a statement that "it removes one of the biggest obstacles to improving educational opportunities for all children."
Erica Smith, an attorney for the Institute for Justice, the group representing parents in the case, called the ruling "a great victory" and said it "will allow states across the country to enact educational choice programs that provide parents the maximum educational options. " "
Judge Stephen Breyer, one of the liberal members of the court, disagreed and wrote: "If, for 250 years, we have drawn a line to compel taxpayers to pay the wages of those who teach their faith from the pulpit, I do not see how today you can demand that Montana adopt a different vision respecting those who teach it in the classroom. "
Judge Sonia Sotomayor, another liberal on the bench, said in her dissent that the ruling "is perverse."
"Without any need or power to do so, the Court appears to require that a state reinstate a tax credit program that the Constitution did not first require," he wrote.
The National Education Association, likewise, criticized the decision, with its president, Lily Eskelsen García, saying that "the court has made matters worse, opening the door to further attacks on state decisions not to fund religious schools."
The controversy stemmed from a program created by the Montana legislature in 2015 that allowed residents to receive a tax credit of up to $ 150 for a contribution to a scholarship program. The donations were used to fund tuition scholarships for children who wish to attend the private school of their choice. In Montana, most private schools are religiously affiliated.
Shortly thereafter, however, the Montana Department of Revenue excluded affiliated religious schools from the program, citing the fact that the state Constitution prohibits state funds for religious education.
Three low-income mothers, Kendra Espinoza, Jeri Ellen Anderson and Jaime Schaefer, sued, saying they had scholarships to support their children at Stillwater Christian School in Kalispell, Montana. Their attorneys argued that they could not be denied public benefits that were widely available to others for private non-religious schools.
The Montana Supreme Court struck down the entire program and held that it violated the state Constitution that prohibits state funds to help religious schools.
The Institute of Justice asked the court to rule that the opinion of the state Supreme Court violated the United States Constitution. They said the Montana amendment that bans state funding for religious schools violates the equal protection clause because it is rooted in religious spirit.
The United States Department of Justice sided with parents, arguing that the state's constitutional amendment violates the Free Exercise Clause of the federal Constitution because it discriminates on the basis of "religious status in the distribution of public benefits."
Montana attorneys argued that the amendment is valid because states are finding a balance, protecting the free exercise of religion and ensuring the separation of church and state.
The case was a follow-up to a 2017 opinion when the Supreme Court ruled that a Missouri policy excluding a church-run preschool from a grant program used to resurface playgrounds was unconstitutional. However, in a footnote at the time, Roberts said the opinion did not refer to funds used for religious purposes, leaving that topic for another day.
He said the program in question in the case "provided the necessary help for parents who pay taxes to support public schools but who disagree with teaching there."
"The program helped parents of modest means to do what wealthier parents can do: send their children to a school of their choice," he said.
This story has been updated with additional quotes from opinion, reaction to decision, and context.
CNN's Joan Biskupic and Betsy Klein contributed to this report.