Minnesota Legislature
HF 310
as introduced - 94th Legislature (2025 - 2026) Posted on 02/20/2025 04:50pm
Bill Text Versions
| Engrossments | ||
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| Introduction | Posted on 02/11/2025 |
Current Version - as introduced
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A bill for an act
relating to taxation; individual income; expanding the dependent care credit;
amending Minnesota Statutes 2024, sections 290.0131, by adding a subdivision;
290.067.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1.
Minnesota Statutes 2024, section 290.0131, is amended by adding a subdivision
to read:
new text begin Subd. 21. new text end
new text begin Dependent flexible spending accounts. new text end
new text begin
For a taxpayer who claims the credit
under section 290.067, or for a married taxpayer filing a separate return whose spouse claims
the credit under that section, the amount of dependent care assistance that is excluded from
gross income under section 129 of the Internal Revenue Code is an addition.
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, 2024.
new text end
Sec. 2.
Minnesota Statutes 2024, section 290.067, is amended to read:
290.067 DEPENDENT CARE CREDIT.
Subdivision 1.
new text begin Definitions; credit allowed; new text end amount of credit.
(a) new text begin For the purposes of
this section, the following terms have the meanings given:
new text end
new text begin
(1) "employment-related expenses" has the meaning given in section 21(b)(2) of the
Internal Revenue Code; and
new text end
new text begin
(2) "qualifying individual" has the meaning given in section 21(b)(1) of the Internal
Revenue Code, except that in determining whether the child qualified as a dependent, income
received as a Minnesota family investment program grant or allowance to or on behalf of
the child must not be taken into account in determining whether the child received more
than half of the child's support from the taxpayer.
new text end
new text begin (b) new text end A taxpayer may take as a credit against the tax due from the taxpayer and a spouse,
if any, under this chapter an amount equal to deleted text begin the dependent care credit for which the taxpayer
is eligible pursuant to the provisions of section 21 of the Internal Revenue Code except that
in determining whether the child qualified as a dependent, income received as a Minnesota
family investment program grant or allowance to or on behalf of the child must not be taken
into account in determining whether the child received more than half of the child's support
from the taxpayerdeleted text end new text begin the taxpayer's eligible dependent care expenses, as determined under
subdivision 1a, multiplied by the taxpayer's credit percentage, as determined under
subdivision 1bnew text end .
deleted text begin
(b) If a child who has not attained the age of six years at the close of the taxable year is
cared for at a licensed family day care home operated by the child's parent, the taxpayer is
deemed to have paid employment-related expenses. If the child is 16 months old or younger
at the close of the taxable year, the amount of expenses deemed to have been paid equals
the maximum limit for one qualifying individual under section 21(c) and (d) of the Internal
Revenue Code. If the child is older than 16 months of age but has not attained the age of
six years at the close of the taxable year, the amount of expenses deemed to have been paid
equals the amount the licensee would charge for the care of a child of the same age for the
same number of hours of care.
deleted text end
deleted text begin
(c) If a taxpayer:
deleted text end
deleted text begin
(1) has a child who has not attained the age of one year at the close of the taxable year;
and
deleted text end
deleted text begin
(2) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment related expenses paid for
that child under paragraph (a) or the deemed amount under paragraph (b), the lesser of (i)
the earned income of the taxpayer or (ii) the amount of the maximum limit for one qualifying
individual under section 21(c) and (d) of the Internal Revenue Code will be deemed to be
the employment related expense paid for that child. The earned income limitation of section
21(d) of the Internal Revenue Code shall not apply to this deemed amount. These deemed
amounts apply regardless of whether any employment-related expenses have been paid.
deleted text end
deleted text begin
(d) If the taxpayer is not required and does not file a federal individual income tax return
for the tax year, no credit is allowed for any amount paid to any person unless:
deleted text end
deleted text begin
(1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or
deleted text end
deleted text begin
(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.
deleted text end
deleted text begin
In the case of a failure to provide the information required under the preceding sentence,
the preceding sentence does not apply if it is shown that the taxpayer exercised due diligence
in attempting to provide the information required.
deleted text end
deleted text begin (e)deleted text end new text begin (c)new text end In the case of a nonresident or part-year resident, the credit determined under
deleted text begin section 21 of the Internal Revenue Codedeleted text end new text begin this sectionnew text end must be allocated deleted text begin based on the ratio
by which the earned income of the claimant and the claimant's spouse from Minnesota
sources bears to the total earned income of the claimant and the claimant's spousedeleted text end new text begin using the
percentage calculated in section 290.06, subdivision 2c, paragraph (e)new text end .
deleted text begin
(f) For residents of Minnesota, the subtractions for military pay under section 290.0132,
subdivisions 11 and 12, are not considered "earned income not subject to tax under this
chapter."
deleted text end
deleted text begin
(g) For residents of Minnesota, the exclusion of combat pay under section 112 of the
Internal Revenue Code is not considered "earned income not subject to tax under this
chapter."
deleted text end
deleted text begin
(h) For taxpayers with federal adjusted gross income in excess of $52,230, the credit is
equal to the lesser of the credit otherwise calculated under this subdivision, or the amount
equal to $600 minus five percent of federal adjusted gross income in excess of $52,230 for
taxpayers with one qualifying individual, or $1,200 minus five percent of federal adjusted
gross income in excess of $52,230 for taxpayers with two or more qualifying individuals,
but in no case is the credit less than zero.
deleted text end
new text begin Subd. 1a. new text end
new text begin Eligible dependent care expenses. new text end
new text begin
A taxpayer's eligible dependent care
expenses equals the amount of employment-related expenses incurred by the taxable year,
but is limited to:
new text end
new text begin
(1) $12,000 if there was one qualifying individual with respect to the taxpayer; or
new text end
new text begin
(2) $24,000 if there were two or more qualifying individuals with respect to the taxpayer.
new text end
new text begin Subd. 1b. new text end
new text begin Credit percentage. new text end
new text begin
(a) The credit percentage equals 50 percent, subject to
the reduction in paragraphs (b) and (c).
new text end
new text begin
(b) A taxpayer's credit percentage is reduced by one percentage point for each $1,000,
or fraction thereof, by which the taxpayer's adjusted gross income exceeds $150,000.
new text end
new text begin
(c) For a married taxpayer filing a separate return, the credit percentage is the amount
determined under paragraphs (a) and (b), except the income limit used to calculate the
reduction under paragraph (b) must be half the amount used for other filers, after adjusting
for inflation.
new text end
Subd. 2b.
Inflation adjustment.
The commissioner shall annually adjust the dollar
amount of the income threshold at which the deleted text begin maximumdeleted text end credit new text begin percentage new text end begins to be
reduced under subdivision deleted text begin 1deleted text end new text begin 1bnew text end as provided in section 270C.22. The statutory year is taxable
year 2019.
new text begin Subd. 2c. new text end
new text begin Deemed expenses. new text end
new text begin
(a) If a child who has not attained the age of six years at
the close of the taxable year is cared for at a licensed family day care home operated by the
child's parent, the taxpayer is deemed to have paid employment-related expenses. The
amount of expenses deemed to have been paid equals the amount the licensee would charge
for the care of a child of the same age for the same number of hours of care.
new text end
new text begin
(b) If a married couple:
new text end
new text begin
(1) has a child who has not attained the age of one year at the close of the taxable year;
new text end
new text begin
(2) does not participate in a dependent care assistance program as defined in section 129
of the Internal Revenue Code, in lieu of the actual employment-related expenses paid for
that child under or the deemed amount under paragraph (a), the amount deemed to be the
employment-related expense paid for that child equals the lesser of:
new text end
new text begin
(i) the combined earned income of the couple; or
new text end
new text begin
(ii) the amount of the maximum limit for one qualified individual under subdivision 1a.
new text end
new text begin
(c) The earned income limitation of section 21(d) of the Internal Revenue Code shall
not apply to this deemed amount. These deemed amounts apply regardless of whether any
employment-related expenses have been paid.
new text end
new text begin Subd. 2d. new text end
new text begin Identifying information required. new text end
new text begin
(a) No credit is allowed for any amount
paid to any person unless:
new text end
new text begin
(1) the name, address, and taxpayer identification number of the person are included on
the return claiming the credit; or
new text end
new text begin
(2) if the person is an organization described in section 501(c)(3) of the Internal Revenue
Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name
and address of the person are included on the return claiming the credit.
new text end
new text begin
(b) The rule in section 21(e)(10) of the Internal Revenue Code applies to the credit under
this section.
new text end
Subd. 3.
Credit to be refundable.
If the amount of credit which a claimant would be
eligible to receive pursuant to this subdivision exceeds the claimant's tax liability under this
chapter, the excess amount of the credit shall be refunded to the claimant by the commissioner
of revenue. The amount needed to pay the refunds required by this section is appropriated
to the commissioner from the general fund.
Subd. 4.
Right to file claim.
The right to file a claim under this section shall be personal
to the claimant and shall not survive death, but such right may be exercised on behalf of a
claimant by the claimant's legal guardian or attorney-in-fact. When a claimant dies after
having filed a timely claim the amount thereof shall be disbursed to another member of the
household as determined by the commissioner of revenue. If the claimant was the only
member of a household, the claim may be paid to the claimant's personal representative,
but if neither is appointed and qualified within two years of the filing of the claim, the
amount of the claim shall escheat to the state.
new text begin Subd. 5. new text end
new text begin Employment-related expenses. new text end
new text begin
For the purposes of determining
employment-related expenses, the provisions of sections 21(d) and 21(e)(6) of the Internal
Revenue Code apply.
new text end
new text begin Subd. 6. new text end
new text begin Rules for married couples filing separate returns. new text end
new text begin
A married taxpayer filing
a separate return may claim the credit under this section, but only one spouse may claim
the credit.
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, 2024.
new text end