While the Biden administration’s monthly child tax credit to help families with the costs of raising children has ended, multiple states are issuing their own versions of the child tax credit.
Eligible Minnesota families will receive a direct payment worth $1,750 from the state’s child tax credit program in 2024. The Gopher State, along with Oregon and Utah, created new child tax credits this year, while lawmakers in seven other states expanded existing credits. Minnesota passed bills to provide advanced payments throughout the year rather than a one-time lump sum to families.
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In Minnesota, the new refundable credit is worth $1,750 per child under 18 for households with incomes below $29,500 for single filers and $35,000 for married filers. The credit is available for those filing with an individual taxpayer identification number or Social Security number. Both the credits and brackets are indexed to inflation, according to the Institute on Taxation and Economy Policy.
Residents will not be eligible for the tax credit if they are a full-year nonresident, have a 2- or 10-year IRS ban on claiming the federal earned income tax credit, are a dependent or qualifying child of another person, or have a filing status of “Married Filing Separately,” according to the Minnesota Department of Revenue.
“Complete Schedule M1CWFC, Minnesota Child and Working Family Credits, to see if you qualify for this credit. This schedule will be available before the 2024 filing season,” the department said.
Child tax credits are intended to help reduce poverty, boost economic security, and invest in children. State child tax credits can help “counteract some deficiencies in the federal CTC and lead to meaningful reductions in child poverty and deep poverty,” according to the institute.
The federal CTC provides a credit of up to $2,000 for each dependent child under age 17. It phases out for married couples with incomes above $400,000 and for unmarried parents with incomes exceeding $200,000. A federal CTC is only partially refundable, so families can only receive $1,500 per child in the form of a tax refund.
California, Colorado, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, and Vermont have refundable tax credits. Idado, Oklahoma, and Utah have nonrefundable credits, and Arizona has a one-time nonrefundable child tax rebate.
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These new and expanded credits are all permanent except for Arizona’s 2023 rebate, Oregon’s credit (which expires in 2029), and New Mexico’s credit, which is scheduled to expire in 2032.
Minnesota also has a $1,000 child tax rebate for eligible families through the child and dependent care credit program, which is a separate program from the child tax credit. Residents who file their 2023 tax returns can qualify for a rebate worth up to $2,100. The rebate is refundable, so a household can collect money even if they do not owe income tax.
