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Minnesota

State Income Taxes and Credits


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Most states levy state income taxes, but the tax burden on low-income families varies significantly depending on where they live. A growing number of states offset this burden with state earned income tax credits and/or state child and dependent care tax credits. These credits are typically based on provisions in the federal income tax code, but states make all decisions regarding eligibility and benefit levels. [More detail...]

Federal decisions are italicized.

Income Tax Liability

Tax threshold

Income tax threshold for single-parent family of 31$31,000/year (2007)
Income tax threshold for two-parent family of 41$34,500/year (2007)

Tax burden

Income tax burden for single-parent family of 3 at 100% FPL1$-1,179/year (2007)
Income tax burden for two-parent family of 4 at 100% FPL1$-1,651/year (2007)

State Earned Income Tax Credit (EITC)

Income eligibility criteria

Income eligibility rules same as federal EITC2Yes (2009)3
Income limit for 1-parent family with 2 qualifying children2$40,295/year (2009)4

Benefit level

Refundable credit available2Yes (2009)
Percent of federal EITC222-46% (2009)5
Max benefit for family with 2 qualifying children2Data not available (2009)

State Child and Dependent Care Tax Credit

Income eligibility criteria

Income eligibility rules same as for federal credit6No (2008)
Income limit for family with 2 or more qualifying children6$34,070/year (2008)

Eligible expenses

Child care expenses eligible by same rules as federal credit7Yes (2008)

Benefit level

Refundable credit available6Yes (2008)
Benefit structure6Credit of 100% of federal credit for claimants with income of $20,420/year or less, up to a maximum benefit of $720 for one qualifying child and $1,440 for two or more; percent of federal credit gradually reduced as income increases, until it hits 0% (2008)
Max benefit for family with 2 qualifying children6$1,440/year (2008)
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Data Notes and Sources

Data on State Income Taxes and Credits were compiled by NCCP in June 2009. Some state policy decisions may have changed since these data were collected.

  1. Calculations include income tax credits that are available to all low-income families in the state, such as state earned income tax credits.
    Jason A. Levitis and Andrew C. Nicholas, The Impact of State Income Taxes on Low-Income Families in 2007, Center on Budget and Policy Priorities, 2008. Available at: http://www.cbpp.org (Accessed March 19, 2009).
  2. State EITC Online Resource Center, http://www.stateeitc.com (accessed June 3, 2009); with additional information from NCCP.
  3. Minnesota has a Working Family Credit, which is not expressly structured as a percentage of the federal EITC, although eligibility is the same.
  4. The limit for a two-parent family with one qualifying child is $40,463 per year ($45,295 per year for two qualifying children and $48,279 with three or more qualifying children).
  5. The exact percentage depends on income and number of children.
  6. Nancy Duff Campbell, Joan Entmacher, Amy K. Matsui, Cristina Martin Firvida, and Christie Love. 2006. Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, with updates from National Women's Law Center, 2009 Supplement to Making Care Less Taxing. Washington, DC: National Women's Law Center.
  7. These include care expenses for children under 13 years that allowed the claimant to work or look for work, up to a maximum of $3,000 per year for one child and $6,000 per year for two or more children. Claimed expenses may not exceed claimant's earnings, or, in two-parent families, the earnings of the lesser-earning parent; full-time students are treated as having $250 per month in earned income (or $500 per month in families with two or more children).
    Nancy Duff Campbell, Joan Entmacher, Amy K. Matsui, Cristina Martin Firvida, and Christie Love. 2006. Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, with updates from National Women's Law Center, 2009 Supplement to Making Care Less Taxing. Washington, DC: National Women's Law Center.