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Minnesota Legislature

Working family tax credit would expand under three bills

It’s just one check and it’s not that big. But it’s an important check for a lot of people.

It’s the refund that about 343,000 Minnesota households receive each year as a result of the state’s Working Family Tax Credit. Those whose wages for the tax year come in below a certain level are able to pay less in state taxes or get a larger refund, depending upon how little they make and how many children they have. Most families only receive it once or twice, so it acts as an economic assist on the way to better days.

Eligibility for the credit would be expanded under each of three bills laid over by the House Taxes Committee Wednesday for possible omnibus bill inclusion.

HF1795, sponsored by Rep. Jeff Brand (DFL-St. Peter), would add another child to the formula, creating a new category for those with three or more children, rather than the current “two or more.” HF1620 is a bill sponsored by Rep. Aisha Gomez (DFL-Mpls) that would increase the credit for low-income people without children. And HF1825, sponsored by Rep. Diane Loeffler (DFL-Mpls), would increase credit rates, as well as the maximum credit and phase-out thresholds. None has a Senate companion.

According to the Department of Revenue, the average Working Family Credit refund is currently about $546.

The department also weighed in on how each of the bills would affect recipients’ tax burden. Brand’s bill would reduce the taxes for about 47,900 households by an average of $307. Gomez’s HF1620 would reduce taxes by an average of $125 for about 139,600 tax returns. For HF1825, the average tax reduction would be about $164 for roughly 333,100 families.

The Department of Revenue also estimated that HF1795, if enacted, would decrease the General Fund for Fiscal Year 2020 by $14.7 million. For HF1620, the reduction would be about $17.4 million. And, for HF1825, the General Fund would be reduced by $54.6 million.

“Research is really clear,” Loeffler said. “This stabilizes things for those households at the low end of the economic ladder. And we see it in improved educational outcomes, increased health, increased family stability, less divorce. … The statewide average (of filers receiving the credit) is about 11.6 percent, but there are households dependent upon these resources.”

Sierra Williams, a social services worker and mother of five from Crystal, said her household is one of them.

“When I get my working family credit and tax refund, I usually get those car repairs or new tires that I’ve put off or buy shoes or clothing for my kids,” she said. “I also use it to pay off debt that I’ve accrued that I couldn’t meet with my normal wages, and save it for emergencies throughout the year.”

“It’s an investment not only in these families but in keeping Main Street open, keeping our businesses going,” Loeffler said.


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