Minnesota’s new Child Tax Credit (CTC) will help families achieve their goals and invest in a better future for themselves and their children.
Earlier this session, members of the House Tax Committee heard a brief overview of the state’s Child Tax Credit, which was created in the 2023 tax bill, and an update on its implementation. Department of Revenue Commissioner Paul Marquart shared that as of February 20, $178 million had already been claimed through the CTC, benefiting some 139,000 Minnesota children in families across the state. According to Marquart, the Child Tax Credit will have a “transformational generational impact in the state,” and if correctly implemented, it could lower child poverty by about a third.
The Child Tax Credit is a proven strategy to reduce child poverty and improve family economic security. It allows taxpayers with children to earn up to $1,750 for each qualifying child in the family under the age of 18. Tax filers may qualify for the full $1,750 per child with incomes under $35,000 for married couples or $29,500 for other kinds of families, while families with incomes above those amounts can qualify for a smaller CTC until their incomes hit certain limits.
But, to claim the CTC, Minnesotans must file their Minnesota income taxes. About 30,000 of the 300,000 Minnesota families that could be eligible don’t currently file income taxes, making reaching these folks a critical component of implementation.
Marquart said that Child Tax Credit implementation is a priority of Governor Tim Walz and Lt. Governor Peggy Flanagan. The state’s Department of Revenue has been working with the various state agencies, community advocates, service providers, and free tax preparation organizations to better ensure Minnesotans know how to claim the CTC.
In the hearing, policymakers heard from advocates who are working to reach those eligible tax filers, including Natletha Sumo Kollie, economic justice outreach manager at the Children’s Defense Fund-Minnesota. She shared how impactful the CTC could be for families, quoting a parent from White Bear Lake who described the CTC as providing “breathing room in her tight monthly budget.” With the CTC, families can move from “the precarious paycheck-to-paycheck existence” where unexpected expenses can destabilize the whole family, Sumo Kollie said.
Amy Fisher is a volunteer tax preparer with Prepare+Prosper who helps Minnesotans file their taxes. She offered feedback from families who have already claimed the CTC this filing season and received a larger refund than expected. One single mom told her about the difficulties of stretching her budget each month and how “surprised and grateful” she was for the new CTC this year.
Nan Madden, the director of the Minnesota Budget Project, spoke about the importance of nonprofit organizations in the outreach and education about the CTC to potentially eligible families. “A well-designed CTC like [Minnesota’s] can be especially effective in reducing hardship among children living in rural areas, in communities of color, and in larger families,” Madden said. She emphasized how nonprofit organizations can play an important role in sharing information about the CTC in communities across the state so that every child can experience the state’s opportunity and prosperity.
The Child Tax Credit as designed is expected to reduce child poverty in Minnesota, and its benefits extend to many aspects of life for Minnesotans. For families, the CTC offers greater economic security, as they use the refund for rent, clothing, diapers, and other necessities of raising thriving children. For children, research demonstrates that boosting family incomes through tools like income-targeted tax credits is associated with better school performance, better health outcomes, and higher earnings as adults. Finally, for the state of Minnesota, the new CTC contributes to thriving families and strong communities.