What's at stake?
Every day, hard-working Minnesota families struggle to make ends meet. Tight family budgets make it hard for Minnesotans to pay for child care, education and training to build their skills, reliable transportation, and other things they need to succeed in the workplace and get ahead.
Fortunately, there is a successful tax policy that focuses on working Minnesotans and their families. The Minnesota Working Family Tax Credit encourages and supports work, makes Minnesota's taxes fairer, helps working people across the state meet their basic needs, and gets children off to a stronger start.
More than 315,000 households received the Working Family Credit in 2017, the most current year for which detailed information is available. The Working Family Credit effectively reaches those communities where good jobs are harder to find, including parts of Greater Minnesota and communities of color. Nearly half of the households receiving the credit live in Greater Minnesota, and about one-third of those eligible for the credit are people of color.
The Working Family Credit offsets a portion of the substantial state and local taxes, such as sales taxes, that lower-income working people pay.
The Working Family Credit is Minnesota's version of the federal Earned Income Tax Credit (EITC) and builds on the EITC's documented success in supporting work, reducing poverty, and improving the health and education of children.
Why we should expand the Working Family Credit
As policymakers make tax decisions, they should prioritize everyday Minnesotans who struggle to make ends meet. Lower-income Minnesotans and workers of color have been particularly hard hit by the pandemic, and are the essential workers we’ve all counted on more than ever. Expanding the Working Family Credit would boost their after-tax incomes and prevent additional economic hardship.
Minnesota policymakers should expand the Working Family Credit by:
- Expanding eligibility to include workers and families currently left out because of factors such as age and immigration status; and
- Increasing the size of the credit that eligible workers and families can receive.
What happened in the 2021 tax bill?
Policymakers passed legislation this year that means the Working Family Tax Credit will now reach more lower-income workers. While low-income workers without dependent children have long been eligible for the credit, they have also needed to meet age requirements. This year’s tax bill lowers the age requirement for these workers to include those 19 or 20 years old. An estimated 26,200 workers will become eligible, and receive an average $165 tax credit.