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HF 4890

Minnesota child credit expanded, and fifth tier and rate on the individual income tax established.

2025-2026 Regular Session Introduced by Aisha Gomez and 2 co-sponsors

Expands Minnesota’s child credit to 2,000 per qualifying child and adds a new top tax rate of 10.15% on high incomes, with annual inflation-adjusted brackets and credits.

Author added Rehrauer
#childrenandminors #taxation-income
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WeVote Research Nonpartisan
Bill Summary · HF 4890

Summary of HF 4890 (2025-2026) – Minnesota

Overview

HF 4890 proposes to expand Minnesota’s child tax credit, create a fifth income tax rate tier, and adjust inflation-related provisions for brackets and credits. The bill would affect individual, estate, and trust income tax calculations and implement an effective date beginning in tax years after December 31, 2025.

Main purpose and intent

  • Increase support for families with qualifying children by upgrading the child credit.
  • Modify the state income tax brackets and rates for individuals, including married couples, single filers, and heads of household.
  • Update inflation adjustments for brackets and the child credit to reflect changes in the cost of living.
  • Ensure consistency in tax administration by tying adjustments to the existing inflation-adjustment framework.

Key provisions and changes

1) Expanded Minnesota child credit

  • Replaces the current per-child credit with a higher amount: $2,000 per qualifying child (up from $1,750).
  • The inflation adjustment mechanism for the credit remains in place, with adjustments to be made annually.

2) Fifth tier and rate on the individual income tax

  • Establishes a new top income tax rate of 10.15% on income over $1,000,000 for married filing jointly (with corresponding brackets for other filing statuses).
  • Updated bracket thresholds (for married filing jointly, unmarried, and head of household) to reflect the new 5.35%, 6.8%, 7.85%, and 9.85% brackets within the ranges, culminating at 10.15% for the top tier.
  • Note: The effective thresholds shown in the bill text are adjusted from prior bracket values (e.g., first bracket starting at $48,700 for joint filers, etc.). The structure remains progressive with five rates.

3) Inflation adjustments to brackets (Sec. 2)

  • Requires annual inflation adjustments to the dollar amounts defining each rate bracket, as provided in section 270C.22.
  • The rate applicable to each bracket remains fixed; only the bracket thresholds are adjusted.
  • Adjustments are effective for taxable years after December 31, 2025.

4) Child credit inflation adjustments (Secs. 3 and 4)

  • Sec. 3: Sets the base per-child credit at $2,000 (effective for tax years after December 31, 2025).
  • Sec. 4: Requires annual inflation adjustments to the credit amount, rounded to the nearest $60, starting for taxable years after December 31, 2025.
  • Also includes inflation adjustments to phaseout thresholds for the credit (as per existing inflation adjustment framework, with a 2023 baseline for phaseouts).

Who would be affected

  • Minnesota residents with income subject to state income tax, including:
    • Married couples filing jointly or as surviving spouses
    • Married filing separately
    • Unmarried individuals
    • Heads of household
  • Families with qualifying children would see larger child credits.
  • Taxpayers at higher income levels would face a new top marginal rate (10.15%) on income over the specified threshold.

Procedural and timeline notes

  • Effective dates: Provisions affecting tax years after December 31, 2025.
  • Bracket and credit amounts would be adjusted annually for inflation, per established conventions.
  • The bill includes standard inflation adjustments for credits and brackets, aligning with the current framework (270C.22).

Potential implications

  • Increased support for families with children through a higher nonrefundable child credit.
  • Higher top marginal tax rate at the upper end of the income spectrum.
  • Predictable annual changes to tax liability brackets and credits due to inflation adjustments.
  • Administrative alignment with existing Minnesota tax code provisions for inflation updates.

If you’d like, I can provide a comparison to the current law (HF 4890’s relation to present brackets and credits) or a plain-language factsheet for non-technical audiences.

Compiled from official sources — confirm details with the bill’s official record.

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