HF4322

Purpose

• This bill aims to align Minnesota’s personal income tax with recent federal changes by expanding the dependent care credit. It updates how the Internal Revenue Code is defined in Minnesota law to include the federal expansion of the dependent care credit.

Main provisions

• Amends Minnesota Statutes 2024 section 290.01 subdivision 31 to redefine “Internal Revenue Code.”
• The Internal Revenue Code, for Minnesota purposes, will mean the IRC as amended through May 1, 2023, plus the expansion of the dependent care credit described in section 70405 of Public Law 119-21.
• The definition also includes any uncodified federal provisions related to parts of the Internal Revenue Code that Minnesota law incorporates.

What this change does

• By including the federal expansion of the dependent care credit in Minnesota’s definition of the Internal Revenue Code, Minnesota’s tax rules will conform to the federal changes for calculating the dependent care credit. This means Minnesota taxpayers may see changes in how the credit is calculated or applied on their state tax returns, consistent with the federal expansion.

Significant changes to existing law

• The key change is a definitional update: Minnesota will treat the Internal Revenue Code as including the federal expansion of the dependent care credit (via Public Law 119-21, section 70405) and related uncodified federal provisions. This creates conformity with federal rules for the dependent care credit.

Practical implications (summary)

• Taxpayers who claim the dependent care credit on their Minnesota returns could be affected by changes in eligibility or credit amounts if the federal expansion alters those factors.
• Filing and calculation for the dependent care credit at the state level will align with the federal framework after the effective definitions are updated.

Terms to watch (for context)

• Internal Revenue Code, dependent care credit, expansion of the dependent care credit, conformity, Public Law 119-21, section 70405, uncodified provisions, Minnesota Statutes 2024, 290.01 subdivision 31, individual income tax.

Relevant Terms - Internal Revenue Code - dependent care credit - expansion of the dependent care credit - conformity - Public Law 119-21 - section 70405 - uncodified provision - Minnesota Statutes 2024 - 290.01 subdivision 31 - individual income tax