Bill > SF1852

This bill expands Minnesota's dependent care tax credit by introducing several significant changes to make child care expenses more affordable for families. The bill creates a new credit structure with a base rate of 50% for eligible dependent care expenses, which gradually reduces as household income increases, with a minimum credit of 20%. The credit limits are substantially increased, especially for families with young children under five years old: taxpayers can claim up to $3,000 for one qualifying child or $6,000 for two or more children, with additional increases of $7,000 for one young child, $14,000 for two young children, and $19,000 for three or more young children. The credit phase-out begins at $125,000 of adjusted gross income, with the credit percentage reducing by one percentage point for every $2,000 of income above that threshold, until it reaches 20%. For higher-income taxpayers with adjusted gross income over $400,000, the credit continues to reduce. The bill also includes provisions for special circumstances like family day care homes, deemed expenses for couples with infants, and rules for married couples filing separately. These changes aim to provide more substantial financial support for working families with child care expenses, with the new provisions becoming effective for tax years beginning after December 31, 2024.

Budget and Finance

https://www.revisor.mn.gov/bills/bill.php?b=Senate&f=SF1852&ssn=0&y=2025