SF 5177

Introduction - 94th Legislature (2025 - 2026)

Posted on 04/21/2026 09:05 a.m.

A bill for an act
relating to taxation; income and corporate franchise; establishing a tax credit for
employer-provided child care expenses; proposing coding for new law in Minnesota
Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.0687] EMPLOYER-PROVIDED CHILD CARE CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definition. new text end

new text begin (a) For purposes of this section, the following terms have the
meanings given.
new text end

new text begin (b) "Employer" has the meaning given in section 290.92, clause (4).
new text end

new text begin (c) "Internal Revenue Code" means the Internal Revenue Code as amended through July
4, 2025.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin (a) An employer is allowed a credit against the taxes imposed
under this chapter, subject to allocation under subdivision 3, equal to ..... percent of the
amount of the credit allowed under section 45F of the Internal Revenue Code, except the
credit under this section is limited to credits allowed based on qualified child care expenses
or qualified child care resource and referral expenditures that were paid or incurred in
Minnesota.
new text end

new text begin (b) For a taxpayer allowed a credit under section 45F of the Internal Revenue Code
based partly on expenses paid or incurred outside of Minnesota, the credit under this section,
subject to allocation under subdivision 3, equals ..... percent of the amount of the credit
allowed federally that is attributable to expenses paid or incurred in Minnesota.
new text end

new text begin Subd. 3. new text end

new text begin Allocation. new text end

new text begin (a) To qualify for a credit under this section, a taxpayer must submit
an application to the commissioner of employment and economic development for a credit
in the form prescribed by the commissioner of employment and economic development in
consultation with the commissioner of revenue.
new text end

new text begin (b) Upon approving an application for a credit that meets the requirements of this section,
the commissioner of employment and economic development must issue an allocation
certificate that verifies the taxpayer's eligibility for the credit, states the amount of credit,
and states the taxable year in which the credit is allocated.
new text end

new text begin (c) The commissioner of employment and economic development must not issue
allocation certificates for more than $....... of credits each year. The commissioner must not
issue allocation certificates to a taxpayer in excess of $....... for each taxable year. If the
entire amount is not allocated in a year, any remaining amount is available for allocation
in following years until the entire allocation has been made.
new text end

new text begin (d) The director must allocate credits on a first-come, first-served basis.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships. new text end

new text begin Credits granted to a partnership, a limited liability company
taxed as a partnership, or an S corporation are passed through to the partners, members, or
shareholders, respectively, pro rata to each partner, member, or shareholder based on the
partner's, member's, or shareholder's share of the entity's assets or as specially allocated in
the entity's organizational documents or any other executed agreement, as of the last day
of the taxable year.
new text end

new text begin Subd. 5. new text end

new text begin Carryover. new text end

new text begin If the amount of the credit under this section exceeds the taxpayer's
liability for tax under this chapter, the excess is a credit carryover to each of the five
succeeding taxable years. The entire amount of the excess unused credit for the taxable year
must be carried first to the earliest of the taxable years to which the credit may be carried
and then to each successive year to which the credit may be carried. The amount of the
unused credit that may be added under this subdivision may not exceed the taxpayer's
liability for tax, less any credit for the current taxable year.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2026.
new text end