Minnesota passed legislation last year that enacted a new state child tax credit worth up to $1,750 per qualifying child. Eligible Minnesotians can claim the new credit when they file their 2023 state tax returns (for returns being filed now). The credit is fully refundable, meaning even taxpayers who don’t owe any tax could receive the full amount of the credit as a tax refund.
During a press conference earlier this month, Gov. Tim Walz referred to the credit as the best in the country but reminded taxpayers that the credit is not automatic. “You have to file your taxes to get it,” he said.
However, not all Minnesota taxpayers who file taxes this year will qualify for the credit, and some who do might receive a reduced amount. So, how much — if anything — will you get this year? Here’s what you need to know.
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What is the Minnesota child tax credit?
The Minnesota child tax credit is worth up to $1,750 per child for the 2023 tax year. Although this amount is less than the federal child tax credit (CTC) of $2,000, Minnesota’s child tax credit is fully refundable. For comparison, and if nothing changes in Congress, only $1,600 of the federal CTC is refundable for the 2023 tax year. That means that some eligible Minnesota families could receive a higher amount of the state CTC back as a tax refund than they receive for the federal credit.
Additionally, the full $1,750 Minnesota credit is available for qualifying children as old as 17 while only children 16 and younger qualify for the federal child tax credit. (The IRS allows a $500 credit for 17-year-olds). There is no limit to the number of children that can qualify for the state child tax credit, which can result in significant refunds for households with multiple children.
Minnesota child tax credit eligibility
According to Gov. Walz, $61 million in state child tax credits were awarded during the first week of the 2024 filing season, and each credit averaged $1,253, which is notably less than the credit’s full value of $1,750. That’s because the credit amount is based on income and begins to phase out when income reaches $29,500 ($35,000 if married filing jointly). Taxpayers can complete Schedule M1CWF to determine the amount of the credit they qualify for.
Is there a Minnesota tax credit for children over age 17?
Minnesota offers a tax credit for qualifying older children. How much the credit is worth depends on the number of qualifying children and your income.
- Up to $925 for one qualifying older child
- Up to $2,100 for two qualifying older children
- Up to $2,500 for three or more qualifying older children
Minnesota residents (or part-year residents) for the 2023 tax year can complete Schedule M1DQC to determine if their dependent qualifies as an older child.
Who is not eligible for the credit? Some taxpayers aren’t eligible to receive the Minnesota child tax credit for 2023, regardless of income or age:
- Full-year nonresidents do not qualify for the credit.
- You cannot claim the credit if you have an IRS ban from claiming the federal Earned Income Tax Credit (EITC)
- You cannot claim the credit if you are claimed as a dependent or qualifying child on another tax return.
Is there a new federal expanded child tax credit?
While U.S. Congressional lawmakers have been negotiating a new federal child tax credit, legislation hasn’t passed both chambers yet. However, an expanded federal child tax credit could become available for the 2023 tax year. If passed by Congress and signed by President Biden, the legislation would allow more families with lower incomes and multiple children to qualify for a higher credit amount.
The proposed expanded federal child credit would also allow taxpayers to use prior year income to determine the credit amount. The IRS has said that if Congress passes the new tax legislation during the current tax season, eligible taxpayers would receive refund adjustments automatically, and the pending legislation should not discourage families from filing when they’re ready.
For more information about the status of the federal child tax credit, see New Child Tax Credit Advances to Senate.
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