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Governor Dayton’s dependent care credit proposal merits another look

Nan Madden
May 05, 2014

On Sunday, the Tax Conference Committee got a second look at a proposal to increase support for Minnesota families with one of the most substantial expenses that many face: child care costs.

The Department of Revenue presented an updated version of Governor Dayton’s proposal to expand Minnesota’s dependent care tax credit. The proposal would:

  • Increase the maximum income at which a family can receive the credit to $82,000 for families with one dependent and $94,000 for families with two or more dependents. It’s currently around $39,000.
  • Increase the size of the credit for which families can qualify. The new maximum credit would be $1,050 for families with one dependent and $2,100 for families with two or more.

An estimated 94,000 Minnesota families would receive the expanded credit, which would average $477. The proposal would be a $32 million increase in the credit in FY 2015.

The committee presentation included a reminder that while the credit goes primarily to families with child care expenses, it is also available to families with disabled dependents of any age.

The Tax Conference Committee has some important decisions to make in the waning days of the legislative session. Our top priority for the second tax bill is the House’s boost to the Renters’ Credit.

But the conference committee should give serious consideration to the Governor’s dependent care proposal as an additional move to make the tax system work better for working families. It is more targeted than the original proposal, and it could be strengthened by further focusing on those with the greatest needs.

The Governor’s proposal would help many Minnesota families, but there is still more work to do, given the importance of affordable, reliable child care for parents to succeed in the workplace and to support children’s development. Low-income families can manage the monthly costs of child care through the Basic Sliding Fee Child Care assistance, which has nearly 8,000 Minnesota families on waiting lists. Additional funding to Basic Sliding Fee child care assistance needs to be a top priority in next year’s budget.

-Nan Madden