Minnesota child credit amount increase

2025-2026 Regular Session Introduced by Liz Boldon

Increases Minnesota child tax credit to $2,000 per qualifying child starting 2026 and autos indexing the credit and phaseout thresholds for inflation annually thereafter.

Referred to Taxes

#taxation #taxation-income

Summary of SF 5275 (Minnesota) – 2025-2026 Session

Purpose and intent

The bill aims to increase the Minnesota child tax credit and adjust related provisions for inflation. It modifies the credit amount for qualifying children and establishes inflation-indexing for future years.

Key provisions and changes

Increase in the credit amount (Subdivision 3):

The child credit per qualifying child is raised from previously $1,750 to $2,000.
Effective for taxable years after December 31, 2025.

Inflation adjustment of the credit amount (Subdivision 7):

Beginning with taxable years after December 31, 2025, the credit amount in Subdivision 3 must be adjusted annually for inflation. The adjustments are to be made as provided in Minnesota Statutes section 270C.22 and rounded to the nearest $60.
The statutory year for this inflation adjustment is the taxable year 2026.

Inflation adjustment of phaseout thresholds (Subdivision 7):

Also beginning with taxable years after December 31, 2023, annual inflation adjustments will be applied to the phaseout thresholds (the income levels at which the credit begins to phase out). The statutory year for this adjustment is 2023, but the bill notes the adjustment continues into subsequent years per 270C.22.
The effective date for these inflation adjustments is for taxable years after December 31, 2025.

Affected parties and scope

Taxpayers with qualifying children who claim the Minnesota child credit on their individual income tax returns.

The changes apply to taxable years after December 31, 2025 for both the base credit amount and later inflation adjustments.

The bill directs the Minnesota Department of Revenue to perform annual inflation adjustments using the statutory framework (270C.22) and to round adjustments to the nearest $60.

Procedural and timeline notes

Introduced and referred: The bill was introduced and referred to Taxes on May 11, 2026.

Co-sponsor: Liz Boldon.

Effective dates:

Base credit increase to $2,000: effective for taxable years after December 31, 2025.
Inflation adjustments: effective for taxable years after December 31, 2025 (with annual adjustments to the credit amount and phaseout thresholds per 270C.22).

Potential impact

Direct fiscal impact for families: Families with qualifying children could receive a higher credit amount beginning in 2026 (and later years, adjusted for inflation).

Revenue and fiscal planning: State revenue impact will depend on the size of the eligible population and the rate of inflation adjustments. The inflation indexing (rounded to the nearest $60) creates a dynamic credit amount over time.

Policy alignment: The bill aligns with standard practice of indexing credits for inflation to maintain their real value over time.

If you’d like, I can provide a quick comparison of current law versus the bill’s changes, or estimate rough annual credit amounts under different inflation scenarios.