2025 Minnesota Child Tax Credit: How It Could Be Different, Yet Better

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Minnesota is already sending child tax credits to eligible low- and middle-income Minnesota families. For 2024, the state’s $1,750 child tax credit is the highest in the country and is available to families with children 17 years old and younger. The 2025 Minnesota child tax credit could be even better as it may allow advance periodic payments to eligible families.

More child tax credit than any other state

Last year, Minnesota state lawmakers approved a nation-leading child tax credit program to reduce poverty by one-third. The maximum credit amount is $1,750 per child (no cap on the number of children), and the credit amount reduces as household income increases.

The full credit is available to single filers with income up to $29,500 (up to $35,000 for married couples filing jointly), while the credit completely phases out for families with one child if their annual income is $52,495 or more.

It must be noted that the threshold income is more for families with more children. For instance, the threshold income for a family with four children is $90,000 a year.

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

2025 Minnesota child tax credit – what’s new?

Minnesota expanded the child tax credit program this legislative session to include “safe harbor” protections. Lawmakers also directed the revenue department to develop an advance payment system to allow eligible families to receive some credit even before filing taxes.

This means that starting next year, eligible families will have the option of receiving 50% of the 2025 Minnesota child tax credit in advance before the start of the tax season. The state Department of Revenue is still sorting out the details, including the frequency and timing of payments – monthly, bi-monthly, or quarterly.

The 2025 Minnesota child tax credit will be similar to the pandemic-era federal child tax credit program. At the time, the federal government allowed eligible families to receive half the child tax credit in six monthly payments from July to December 2021, and the remaining when filing their tax return the following year.

Several studies claimed that the COVID-19 era child tax credit, which was funded by the American Rescue Plan, helped to keep families afloat, as well as reduced food insecurity. If Minnesota implements advance tax credit payments, it will be the first state to do so.

Lawmakers approved another change to the child tax credit this year: “safe harbor” protections. It basically offers a grace period to families whose financial situation improves, and they no longer qualify for the same amount of credit.    

The primary objective of the protection is to ensure that even if someone’s income increases but is still below the full phase-out threshold, the person won’t owe anything back.