How could it be different but better?

Minnesota is already sending child tax credits to eligible low- and moderate-income Minnesota families. The state’s $1,750 child tax credit in 2024 is the highest in the country and is available to families with children age 17 and younger. The 2025 Minnesota Child Tax Credit could be even better because it could allow regular advances to eligible families.

More child tax credits than any other state

Last year, Minnesota lawmakers approved the nation’s best child tax credit program to reduce poverty by one-third. The maximum credit is $1,750 per child (there is no limit to the number of children), and the credit decreases as household income increases.

While the full credit is available to single filers earning up to $29,500 (up to $35,000 for married couples filing jointly), the credit is phased out completely for families with one child earning more than $52,495 per year.

It is important to note that households with more children have higher baseline incomes. For example, the baseline income for a family of four children is $90,000 per year.

According to 2023 tax year data from the Minnesota Department of Revenue, tax filers received an average tax credit of $2,500, or about $1,250 per child. Approximately 210,000 households benefited from this program.

2025 Minnesota Child Tax Credit – What’s New?

Minnesota expanded its child tax credit program this legislative session to include “safe harbor” protections. Lawmakers also directed the Department of Revenue to develop a prepayment system to allow eligible families to receive some credits even before filing their taxes.

This means that starting next year, eligible families will have the option to advance 50% of the 2025 Minnesota Child Tax Credit before tax season begins. The state Department of Revenue continues to iron out details, including the frequency and timing of monthly, bimonthly and quarterly payments.

The 2025 Minnesota Child Tax Credit is similar to the pandemic-era federal child tax credit program. At the time, the federal government allowed eligible families to receive half of their child tax credit over six months from July to December 2021 and the remaining amount when they file their tax return the following year.

Multiple studies have shown that the COVID-19 era child tax credit, funded by the American Rescue Plan, has helped keep families afloat and reduced food insecurity. If Minnesota implements advance tax credit payments, it would be the first state to do so.

Lawmakers approved another change to the child tax credit this year: “safe harbor” protections. It essentially provides a grace period for families whose financial situation has improved and who are no longer eligible to receive credit for the same amount.

The main purpose of the protection is to ensure that if someone’s income increases but is still below the full phase-out threshold, he or she will not owe any money back.