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S.F. No. 2586 - Working family credit modification
 
Author: Senator Ann H. Rest
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: March 29, 2016



 

           Under current law, filers claiming the Minnesota working family credit must also qualify for the federal earned income tax credit (EITC).  The EITC is not available to single filers with no dependents if the filer is under 25 or over 65 years of age.  This bill expands the Minnesota working family credit to single filers 21-24 years of age.  The bill also modifies the amounts of earned income to which the credit applies and is phased out, and modifies the percentage of earned income on which the credit is calculated, so that claimants at the lowest income levels would be eligible for larger credit amounts and the credit would extend to higher income levels.  The income levels are adjusted annually for inflation.

           For filers with no dependent children, the bill increases the percentage of earned income on which the credit is calculated and increases the level of earned income to which the percentage is applied.  The bill also increases the percentage by which the credit phases out over the earned income threshold, but also increases the threshold amount. 

           For filers with dependent children, the bill increases the percentage of earned income on which the credit is calculated and reduces the level of earned income to which the percentage is applied, and then reduces the percentage by which the credit phases out over the earned income threshold and increases the threshold amount. 

           The bill also strikes language that temporarily increases the phaseout thresholds for married filers filing a joint return.  Under current law, the increase in the phaseout would extend through 2017.  Under the bill, the increased phaseout would be permanent.

           Effective beginning in tax year 2016.

 
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