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HF2197 (Legislative Session 94 (2025-2026))

Individual income tax; child credit marriage penalty eliminated and credit phaseout increased, and working family credit limited based on earned income to taxpayers with qualifying children.

AI Generated Summary

Purpose of the Bill

The bill aims to modify tax regulations related to individual income in Minnesota. It focuses on eliminating the marriage penalty in the calculation of the child tax credit and makes various adjustments to the working family credit phaseout, particularly concerning households with qualifying children.

Main Provisions

  • Elimination of the Marriage Penalty: The bill seeks to equalize the child tax credit between married couples filing jointly and single filers by adjusting the income thresholds. This change aims to remove the disadvantage previously faced by married filers compared to single filers.
  • Adjustments to the Phaseout Thresholds: For married taxpayers filing jointly, the phaseout threshold for tax credits will increase from $35,000 to $75,000. For all other filers, the increase will go from $29,500 to $37,500. These changes mean that families with incomes up to these levels can still benefit from tax credits before they start to phase out.
  • Limiting the Working Family Credit: The bill restricts the working family credit to taxpayers who have qualifying children. This means that only those with children will be eligible for the working family credit based on their earned income.

Significant Changes to Existing Law

  • Increase in Income Thresholds: The bill significantly raises the income levels at which tax credits begin to phase out. This is intended to allow more middle-income families, particularly those that are married, to retain tax credits for longer.
  • Targeted Credit Benefits: There is a clearer focus on directing benefits towards families with children, which adjusts the distribution of tax relief.

Relevant Terms

marriage penalty, child tax credit, phaseout threshold, working family credit, qualifying children, earned income, adjusted gross income.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 11, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
March 12, 2025HouseFloorActionAuthor added

Citations

 
[
  {
    "analysis": {
      "added": [
        "A new adjusted gross income threshold for joint filers."
      ],
      "removed": [
        "The previous phaseout thresholds."
      ],
      "summary": "This bill modifies phaseout details for tax credits under section 290.0661.",
      "modified": [
        "Changes to the percentage rate for phaseout calculations from 10% to 12%."
      ]
    },
    "citation": "290.0661"
  },
  {
    "analysis": {
      "added": [
        "The requirement for a taxpayer to have qualifying children to claim the credit."
      ],
      "removed": [
        "The provision allowing credits for taxpayers without children."
      ],
      "summary": "This bill impacts the working family credit under section 290.0671 by redefining qualifying criteria.",
      "modified": [
        "Criteria for phased reduction based on earned income limits."
      ]
    },
    "citation": "290.0671"
  }
]

Sponsors