SF1852

This bill (S.F. No. 1852) proposes amendments to Minnesota's tax code to expand the dependent care credit and establish the Great Start child care credit. Specifically, it modifies Minnesota Statutes 2024, section 290.0131 and section 290.067, affecting tax benefits related to child care.

Key Provisions:

1. Expansion of the Dependent Care Credit

   • The bill broadens tax benefits for taxpayers who claim child care expenses, making it easier for families to receive financial relief for dependent care costs.

2. Introduction of the Great Start Child Care Credit

   • A new tax credit aimed at supporting families with child care expenses is established, likely providing additional financial assistance to help cover child care costs.

3. Changes to Dependent Flexible Spending Accounts (FSAs)

   • The bill modifies tax treatment related to employer-sponsored Dependent Care Assistance Programs (DCAPs).
   • If a taxpayer (or their spouse, in case of married filing separately) claims the dependent care credit, the amount of excluded dependent care assistance under federal tax law (Section 129 of the IRC) must be added back to taxable income for state tax purposes.

Impact:

• This bill aims to increase financial support for families with child care expenses by expanding tax credits.
• It may change the way dependent care benefits are taxed at the state level, potentially offsetting certain federal tax exclusions.

This proposal is currently at the introduction and first reading stage in the Minnesota Senate, referred to the Taxes Committee for further discussion.