MN HF5146

Increases the base dependent care credit from $1,500 to $1,500 plus the federal dependent care credit under Internal Revenue Code section 21, effective for taxable years beginning after December 31, 2023.

Raises the income phaseout threshold from $52,230 to $125,000 for determining when the dependent care credit begins to be reduced for both single and married taxpayers, effective for taxable years beginning after December 31, 2023.

Changes the statutory year for inflation adjustments of the income threshold from taxable year 2019 to taxable year 2024, making the threshold subject to annual adjustment beginning in taxable year 2025.

Maintains existing provisions for deemed employment-related expenses for children under age six in family day care homes, children under age one not in dependent care assistance programs, and special rules for military pay and combat pay.