Subdivision

Provision

1

Provides that taxpayers are eligible for the Minnesota dependent care credit in the same amounts as the federal credit (maximum of $1,050 for claimants with one dependent and $2,100 for claims with two or more dependents), but the Minnesota credit would remain refundable.  Clarifies language pertaining to claiming the credit for a parent’s actual employment-related expenses and deemed expenses for licensed home day care providers and parents with a newborn child.  Licensed home day care providers or married filers with a newborn child may claim the credit using actual or deemed expenses, but cannot use both calculations for claim the credit for the same child.  These taxpayers could claim the credit based on expenses paid to care for other qualifying individuals.    
 

2

Provides the maximum amounts of the credit available.  The credit amounts for actual expenses are increased to $1,050 for claimants with one child and $2,100 for claimants with two or more children.  The maximum credit for deemed expenses is $720 for claimants with one child and $1,440 for claimants with two children.  This credit is phased out for claimants with income in excess of $25,000.
 

3

Updates the base years for the inflation adjustment provisions for the credit. 
 

4

Makes clarifying changes to the provision of law that makes the credit refundable.
 

5

Strikes language that limits the Minnesota credit.  This language is no longer necessary given the increase by reference in sections 1 and 2 to the federal credit.
 

6

Recodifies the definition of “household income” used as the starting point to calculate the K-12 credit.  This is necessary because the reference in that credit is to the definition in the dependent care credit, which is repealed in section 7.
 

7

Repeals the definition of “household income” used as the starting point to calculate the dependent care credit.  Under this bill, the starting point to calculate the credit would be federal adjusted gross income.