Dependent care credit expansion and great start child care credit establishment
If enacted, SF9 will amend various sections of the Minnesota Statutes pertaining to individual income taxes. Notably, it modifies the calculation of the dependent care credit, enabling families to claim higher amounts depending on their income levels and the number of children they have. Specifically, families can claim up to $3,000 for one child and $6,000 for two or more, with additional increases for younger children. The bill also introduces mechanisms to adjust these amounts for inflation, ensuring the credit remains relevant over time.
Senate File 9 (SF9) proposes significant changes to the existing tax structure related to dependent care in Minnesota. This legislation expands the dependent care credit to allow for greater financial support for families with children requiring care, particularly benefiting low to middle-income earners. The bill seeks to establish a new tax credit known as the Great Start Child Care Credit, which is designed to directly address the costs associated with child care, aiming to make it more affordable for families and to support working parents.
Although the bill is largely viewed positively, particularly by child advocacy groups and families that will benefit from lower childcare costs, there are points of contention among legislators regarding the potential fiscal impact on the state's budget. Concerns have been raised about how the expansion of tax credits may affect state revenue and whether it could lead to funding shortfalls in other areas. Furthermore, debates have emerged concerning the equity of the tax credit structure, with some arguing that it may disproportionately benefit higher-income families compared to those in greater need.
The provisions of SF9 are slated to take effect for taxable years beginning after December 31, 2022, ensuring that families can begin to benefit from these changes in the subsequent tax season.