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HF2502 (Legislative Session 94 (2025-2026))

Individual income tax; child credit phaseout increased to eliminate the marriage penalty.

AI Generated Summary

Purpose of the Bill

This bill seeks to amend the existing Minnesota tax code to address the "marriage penalty" within the context of the child tax credit. The goal is to allow married couples who file jointly to benefit more equitably from tax credits compared to individual filers.

Main Provisions

  • Increase in Phaseout Thresholds: The bill proposes to raise the income thresholds at which the child tax credit begins to phase out. For a married couple filing jointly, the threshold will increase from $35,000 to $63,900. For all other filers, the threshold will rise from $29,500 to $31,950.
  • Phaseout of Credits: The credit phaseout under this bill will be implemented by reducing the combined amount of credits by 12 percent of either earned income or adjusted gross income that exceeds the new phaseout thresholds, whichever is greater.

Significant Changes

  • By increasing the phaseout thresholds, the bill aims to effectively eliminate the marriage penalty. Previously, married couples may have been disadvantaged by having a lower threshold for the phaseout of credits if filing jointly compared to filing separately.
  • This change will likely provide greater tax relief for married couples with children, making the household tax burden more equitable regardless of filing status.

Relevant Terms

  • Taxation
  • Individual Income
  • Child Credit
  • Marriage Penalty
  • Phaseout Threshold

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 17, 2025HouseFloorActionIntroduction and first reading, referred toTaxes
March 20, 2025HouseFloorActionAuthor added

Citations

 
[
  {
    "analysis": {
      "added": [
        ""
      ],
      "removed": [
        ""
      ],
      "summary": "This bill amends the phaseout of credits under section 290.0661 subdivision 4.",
      "modified": [
        "Increases phaseout thresholds to eliminate the marriage penalty."
      ]
    },
    "citation": "290.0661",
    "subdivision": "subdivision 4"
  },
  {
    "analysis": {
      "added": [
        ""
      ],
      "removed": [
        ""
      ],
      "summary": "Modifies the coordination of credits in conjunction with section 290.0661.",
      "modified": [
        "The bill adjusts the coordination of child credits and their phaseouts by updating threshold amounts."
      ]
    },
    "citation": "290.0671",
    "subdivision": ""
  }
]

Progress through the legislative process

17%
In Committee

Sponsors