Bill > HF495

This bill proposes a new tax subtraction for day care costs paid by taxpayers in Minnesota, allowing individuals to reduce their taxable income by the amount spent on licensed child care services. Specifically, the bill defines "day care costs" as the amount paid to a licensed child care center, family child care, or group family child care in a given tax year. The subtraction is not unlimited; it can only be claimed for day care expenses that exceed the amount of dependent care assistance already excluded from gross income under federal tax law (Section 129 of the Internal Revenue Code). This means that taxpayers can only subtract day care costs that go beyond any tax-free dependent care benefits they already receive from their employer or other sources. The provision will take effect for tax years beginning after December 31, 2024, giving taxpayers a new potential way to reduce their state income tax liability and providing some financial relief for families with child care expenses.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=House&f=HF0495&ssn=0&y=2025