Governor, lawmakers agree families need help with care costs — but how much?

Both the governor and Legislature agree that working families need help paying for child and dependent care costs – it’s a matter of in what form, how much and to whom?

This year’s recrafted-from-last-year’s-dependent-care-credit-proposal was on the table during Tuesday’s House Taxes Committee.

Rep. Jenifer Loon

Sponsored by Rep. Jenifer Loon (R-Eden Prairie), HF1499 would increase the current tax credit and raise the threshold for phase-out to an adjusted gross income from $39,710 to over $70,000. The credit would be increased from $720 to $11,050 for one dependent and from $1,440 to $2,100 for two or more dependents.

“With Minnesota being third-highest for child care costs [in the country,] we really need to do something to help people with the costs,” Loon said.

The bill was held over for inclusion in a possible omnibus bill. The companion, SF1803, sponsored by Sen. Paul Anderson (R-Plymouth), awaits action by the Senate Taxes Committee.

WATCH Committee discussion on the bill 

A compromise dependent care credit was included in last year’s vetoed tax bill, and, while not currently in agreement on the amount, Gov. Mark Dayton is once again receptive to the measure. Funding to support the credit is included in his 2018-19 proposed budget; however, the phase-out thresholds would be more generous than those laid out by Loon.

According to budget documents, “The credit would start to phase down at incomes above $77,000 and reach $0 for those with two children and income above $101,000. The maximum state credit for those with two children earning over $43,000 would be $1,200.”

According to a Department of Revenue analysis, HF1499 would cost the General Fund about $58.4 million over the 2018-19 biennium and could affect approximately 67,000 Minnesotans.