S.F. No. 4715 - Dependent Care Credit Expansion

• Adds a new subdivision requiring taxpayers claiming the dependent care credit to include dependent care assistance excluded from gross income under federal IRC section 129 as an addition to Minnesota taxable income, effective for taxable years beginning after December 31, 2022.

• Restructures the dependent care credit calculation to base the credit on eligible dependent care expenses (capped at $12,000 for one qualifying individual or $24,000 for two or more) multiplied by a 50 percent credit percentage, rather than directly referencing the federal credit.

• Reduces the credit percentage by one percentage point for each $1,000 (or fraction thereof) of adjusted gross income exceeding $150,000, with a lower income threshold of $75,000 for married taxpayers filing separately.

• Establishes deemed employment-related expenses for children under age six cared for at licensed family day care homes operated by parents and for infants under age one not participating in dependent care assistance programs.

• Keeps the credit refundable, allowing taxpayers to receive refunds when the credit exceeds their tax liability, with identifying information requirements for care providers and inflation adjustments to income thresholds beginning in taxable year 2019.