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Committee advances Great Start Childcare Tax Credit to taxes committee
Summary
Chair Katiza Waddoun moved House File 1384 to expand the dependent-care tax credit for families with children under age 6 and to raise income eligibility; a statewide childcare provider group testified in support and the bill was re-referred to the tax committee.
Chair Katiza Waddoun introduced House File 1384, the Great Start Childcare Tax Credit, and moved the bill to the Taxes Committee. The measure would amend the state dependent-care credit to provide larger tax relief for families with children under age 6 and raise the credit caps for households with multiple young children.
Waddoun said the proposal expands the current dependent-care credit by adding an additional $7,000 per qualifying young child to the existing limits, effectively creating a $10,000 cap for one child under age 6 and larger caps for households with two or more young children. The credit would phase down for higher incomes and fully phase out at household income above $400,000, as written in the bill.
Claire Sanford, chair of government relations for the Minnesota Child Care Association, testified in support. Sanford said many licensed centers are under-enrolled because families cannot afford care, and that expanding help for families with children under age 5 addresses the period when childcare is most expensive. “We wholeheartedly believe that childcare needs to be made cheaper for families,” Sanford said.
Members asked technical questions about which costs would qualify as employment-related expenses and about anticipated fiscal impacts. Chair Waddoun said a prior version of the proposal (similar to House File 9 in 2022) carried an estimated fiscal impact in the 2022 analysis of roughly $200 million per year; she said the committee would continue work with the Department of Revenue and the tax committee on implementation details, including whether advanced payment options could be used.
After brief questioning from members including Representative Nadeau, the committee voted by voice to re-refer House File 1384 to the Taxes Committee.
Why it matters: Sponsors argue broader, more targeted tax relief for families with young children will lower out-of-pocket childcare costs, help parents participate in the workforce and better align assistance to the highest-cost early-childhood years.
What happens next: The bill was sent to the Tax Committee for further consideration of fiscal impacts and drafting details.
