EARNED INCOME TAX CREDIT (EITC)

Minnesota offers a slightly different version of the federal EITC at the state level, known as the Working Family Credit (WFC).

Rate (Fully-Refundable): 34% on average (Via the Center on Budget and Policy Priorities: “Minnesota’s credit for families with children is structured as a percentage of income rather than a percentage of the federal credit. It does not include the federal EITC’s features of a larger credit for families with three or more children or a higher income phase-out for married couples. The average given here reflects total projected state spending for the Working Family Credit divided by projected federal spending on the EITC in Minnesota as modeled by Minnesota’s House Research Department; this average fluctuates from year to year.”)

Eligibility Requirements: All Minnesota taxpayers must first qualify for the federal EITC and are then subject to the income guidelines of Schedule M1 WFC.

Latest Legislative Action: In 2023, Gov. Tim Walz signed HF 1938 as part of the One Minnesota Budget, expanding the WFC to filers using an Individual Taxpayer Identification Number (ITIN).

• In 2023, Gov. Tim Walz enacted a one-time refundable tax credit as part of the One Minnesota Budget, valued at $260 for single filers and up to $1,300 for families with three children.
• On May 30, 2019, Minnesota Governor Tim Walz signed legislation to expand the state’s WFC as part of a broader tax package. Previously, the highest threshold was for families with two or more dependent children. The new legislation created a fourth tier for families with three or more dependent children and increased the credit’s income thresholds for the existing three tiers (no qualifying children, one qualifying child, and two qualifying children.) The legislation also lowered the age of eligibility for the credit to 21 for workers without dependent children.
• On June 6, 2016, Gov. Mark Dayton exercised a “pocket veto” by refusing to sign an omnibus tax bill that would have expanded the WFC by $150 million and increased the child care tax credit. Gov. Dayton is currently negotiating a deal with legislators to call for a second special session in August to pass revisions to a mistake in the tax bill that would have cost the state $100 million in unintended lost revenue.

CHILD TAX CREDIT (CTC)

Rate (Fully-Refundable): $1,750 per eligible child

Eligibility Requirements:

• All qualifying children must be under the age of 18.

Latest Legislative Action: In 2024, Minnesota passed HF 5247, permitting filers to receive advance payments of the CTC in installments throughout the year, rather than only receiving the refund at once during the tax season.

• As part of the One Minnesota Budget, Gov. Tim Walz established a new state CTC valued at $1,750 per eligible child, with no limit on the number of children that can be claimed.³  The credit phases out for incomes above $35,000 (married filing jointly) or $29,500 (single/head of household) and is indexed to inflation beginning in 2026.
• In 2013, a number of powerful Minnesota legislators, including the majority leaders in both Houses, introduced a proposal to create a Child Tax Credit of $100 for each child that would begin phasing out for families above 300% of the poverty line and would be unavailable to families above 400%. However, the bill never reached the floor of either chamber for a vote.

CHILD AND DEPENDENT CARE TAX CREDIT (CDCTC)

Rate (Fully-Refundable):² For households with adjusted gross incomes of less than $64,150, the credit is worth $600 for one child and $1,200 two or more children. The credit is phased out with any income over $64,150 according to the following table.

Eligibility Requirements: See Minnesota’s CDCTC information page.