MN SF1852

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

Sets credit percentage at 50% of eligible expenses, phasing down by 1 percentage point for each $2,000 of adjusted gross income above $125,000, until reaching 20% at higher incomes

Requires taxpayers who claim the dependent care credit and also use a dependent care flexible spending account (FSA) to add the FSA exclusion amount back to their taxable income

Establishes base eligible expense limits of $3,000 for one qualifying individual and $6,000 for two or more, with the young child increases added on top

Effective for taxable years beginning after December 31, 2024, with inflation adjustments to income thresholds beginning in taxable year 2025