MN SF4205

Expands the dependent care credit by increasing eligible expense limits for taxpayers with young children (under age 5): $7,000 additional for one young child, $14,000 for two young children, and $19,000 for three or more young children.

Restructures the credit percentage to begin at 50 percent and phase down by one percentage point for each $2,000 of adjusted gross income exceeding $125,000 until reaching 20 percent, with further reductions for income over $400,000.

Increases the base eligible dependent care expense limits from $2,400/$4,800 to $3,000/$6,000 for one or multiple qualifying individuals respectively.

Treats dependent care assistance excluded from gross income under federal tax law as an addition to Minnesota taxable income for taxpayers claiming the credit.

Effective for taxable years beginning after December 31, 2020, with the dependent flexible spending account provision effective after December 31, 2021.