H.F. No. 4349 Summary

• Creates a new addition to Minnesota taxable income for dependent care assistance excluded from federal gross income under section 129 of the Internal Revenue Code for taxpayers claiming the dependent care credit.

• Restructures the dependent care credit calculation to equal eligible dependent care expenses (capped at $12,000 for one child or $24,000 for two or more children) multiplied by the taxpayer's credit percentage.

• Establishes a base credit percentage of 50 percent, reduced by one percentage point for each $1,000 of adjusted gross income exceeding $150,000.

• Expands deemed expense provisions for infants under age one not participating in dependent care assistance programs, allowing couples to claim deemed expenses equal to the lesser of combined earned income or the federal maximum limit.

• Makes all changes effective for taxable years beginning after December 31, 2022.