Family tax credits are investments in our future
Advocacy
Paul Marquart | June/July 2024 Footnote
Editor's note: Updated June 4, 2024
As a parent and grandparent, former teacher and legislator, and state revenue commissioner, I’ve been blessed with several perspectives on the importance of helping families succeed in our state.
Minnesota has a history of investing in our children and families — because when they thrive, so does our state. Last year, we enacted a Child Tax Credit (CTC) to reduce income taxes and increase refunds to help parents meet their kids’ daily needs and invest in their future.
Like its federal equivalent, the Minnesota credit helps reduce childhood poverty. It is a key part of Gov. Tim Walz’s One Minnesota initiative to build a state where everyone has opportunities to succeed no matter where they live, what they earn or who they are.
By the numbers
According to Department of Revenue statistics, 205,000 returns have claimed the CTC this year (as of May 14). The average filer has two children — age 17 or younger — and receives a credit of about $1,250. In all, that’s helping families with 416,000 qualifying children with total credits of $517 million.
In addition, 475,000 returns have claimed the state Working Family Credit (WFC). The average filer received a credit of $315, with total credits of $150 million. This includes about 35,000 families with qualifying older children or dependents — ages 18-23 — who received a credit of $925-$2,500.
Putting all this together, the Child Tax and Working Family credits provided $666 million to families with 457,000 qualifying children. The average credit was about $1,400, though some families received a larger boost. That represents a whole lot of diapers, food, clothing and opportunities for families to save or invest in themselves!
As CPAs, many of these families with low-to-moderate income are among your clients. More than 215,000 returns (45%) claiming the CTC and/or WFC were filed by paid tax preparers. Another 13,000 (3%) were filed by volunteer tax preparers through the Volunteers in Tax Assistance (VITA) and similar programs.
Paid tax preparer returns accounted for more than half of the Child Tax and Working Family credits claimed this year — $371 million in all, with an average credit of around $1,725. Put another way, your work helped more than 120,000 Minnesota families (and 265,000 children) get these important tax benefits.
Beyond the numbers
As CPAs and tax officials, we’re accustomed to thinking in numerical terms. The Child Tax and Working Family credits — along with others like the K-12 Education Credit and Subtraction — certainly post impressive numbers.
These tax benefits help hundreds of thousands of Minnesotans, mostly working parents who earn low-to-moderate wages and pay a larger share of their income as state and local taxes than higher-earning households.
But their impact goes far beyond short-term tax relief.
The money parents spend on everyday necessities like food, clothing and medicine goes back into their communities, which helps support local businesses and jobs while strengthening the economy.
In a similar way, parents’ ability to provide educational or other opportunities for their children, or save for their future, also benefits everyone in the state. Educating and retaining skilled workers is more crucial than ever to Minnesota’s success in an economy that’s increasingly driven by technology.
Ultimately, the credits, subtractions and refunds in our tax code increase financial stability and economic opportunities for children and families. These tax benefits are crucial investments in our state’s most important resource: its people.
As CPAs, working on behalf of your clients, you help make those investments happen, which is a key part of Revenue’s mission: Working together to fund the future for all of Minnesota. Thank you!
Paul Marquart is commissioner of the Minnesota Department of Revenue.
