Increase to dependent care credit has bipartisan support

Legislators and the governor agree that Minnesota families are in need of financial relief when it comes to costs of child and dependent care.

The most expensive times for parents during the child-rearing years are when the youth are in child care and later on in college, Rep. Jenifer Loon (R-Eden Prairie) told the House Taxes Committee Wednesday.

Rep. Jenifer Loon

She sponsors HF1064 that would increase the number of families eligible for the state dependent care credit by bringing the current law closer to that of the federal government’s provisions. The bill was held over for possible inclusion in an omnibus bill. It has no Senate companion.

Under Loon’s bill, the maximum credit would be increased to $1,050 for one dependent and to $2,000 for two or more dependents.

Supported by Committee Chair Rep. Greg Davids (R-Preston) and some DFLers, the bill would provide for a refundable credit for a portion of dependent expenses, and it would be phased out for adjusted gross income over $70,000. The bill is projected to cost the General Fund approximately $38 million annually, and would provide an average credit of $475.

The credit currently is limited to a maximum of $720 for one child and $1,440 for two or more children, and is based on total household income. In tax year 2015, according to the Revenue Department fiscal note, the maximum amounts are reduced for taxpayers with total household incomes over $25,750 so that a taxpayer with income over $39,400 receive no credit.

Gov. Mark Dayton is proposing in his biennial budget to invest nearly $100 million to expand the child and dependent care credit, whereby the average family would save $429 a year.