Minnesota · families
Credits and breaks for Minnesota families: $1,800 a child, the Working Family Credit, school costs and rent
Minnesota pays families through refundable credits rather than deductions, and the amounts are large: $1,800 for every child under 18, a Working Family Credit on top, a refundable child care credit, a K-12 credit or subtraction for school expenses, and a renter’s credit of up to $2,780, all on the income tax return. Who gets each one, where the income limits fall, how the 529 and head-of-household rules work, and a worked example of a family of four that pays $257 of tax and gets back more than $7,000.
By Charles Trautman, EA, editor
Need to Know Tax · written from Minnesota Department of Revenue sources, November 3, 2026; updated November 12, 2026 after the election · not yet reviewed by a Minnesota practitioner
The Minnesota Child Tax Credit is $1,800 per child under 18 for 2026, with no limit on the number of children, refundable in full, and open to parents who file with an ITIN. It is aimed at lower-income families: the credit and the Working Family Credit together are reduced by 12% of income above $38,770 on a joint return or $32,680 for everyone else, so one child is gone at about $56,000 of joint income, two at about $71,000, three at about $86,000. Alongside it sit the Working Family Credit, Minnesota’s version of the earned income credit, worth up to $388 plus more for older dependent children; a child and dependent care credit of up to $2,100 that is refundable; a K-12 education credit of 75% of school expenses up to $1,500 per child, or a subtraction for the same expenses with no income limit; a $5,300 exemption for each dependent; and the Renter’s Credit, now claimed on the income tax return. A family under $50,000 with two children can collect more from these credits than it pays in federal and Minnesota tax combined.
All of the refundable credits are claimed on Schedule M1REF and paid out whether or not any Minnesota tax is owed. A family with $25,000 of wages and two children owes no Minnesota tax and gets $3,988 of child and Working Family Credit, plus whatever the child care and renter’s credits add. None of it arrives if no return is filed.
The Child Tax Credit
The credit is $1,800 for each qualifying child who is under 18 at the end of 2026, using the federal definition of a qualifying child. It was $1,750 for 2023 through 2025; 2026 is the first year it is indexed. There is no earned income requirement and no minimum income, and a child with an ITIN or a parent with an ITIN qualifies. It is claimed on Schedule M1CWFC.
The phase-out is shared with the Working Family Credit. The two credits are added together, then reduced by 12% of the greater of earned income or AGI above $38,770 for married filing jointly or $32,680 for every other filing status. Each $1,000 of income over the line costs $120 of credit. For one child the combined credit is gone at about $56,065 joint ($50,905 other); two children at about $71,065 ($65,905); three at about $86,065 ($80,905) (verify). Married filing separately cannot claim it.
Advance payments. A family that claimed the credit on last year’s return may elect to receive half of the coming year’s expected credit in three advance payments, with the balance settled on the return. Anyone who took advance payments must file, even with no income, and a family whose income rose can owe some back.
The Working Family Credit
Since 2023 the Working Family Credit no longer follows the federal earned income credit. It is 4% of the first $9,690 of earned income, so a maximum of $388 for anyone who earns $9,690 or more, and the maximum holds whether there are children or not. A filer with no children must be 19 to 64 (verify); with children there is no age test. On top of the $388 come fixed amounts for “qualifying older children,” dependents 18 to 24 who are students or disabled and so are too old for the Child Tax Credit: $1,020 for one, $2,330 for two, $2,770 for three or more. A family with a 20-year-old in college and a 15-year-old at home gets $1,800 for the 15-year-old on the child credit and $1,020 for the student on the Working Family Credit, plus the $388.
The Working Family Credit phases out with the child credit, under the same 12% rule and the same $38,770 and $32,680 lines, so a filer with no children loses the $388 by about $42,000 joint or $35,900 other (verify). Married filing separately cannot claim it, and the filer needs earned income from work or self-employment.
Child and dependent care
Minnesota’s Child and Dependent Care Credit on Schedule M1CD is refundable, which the federal credit is not, and for 2026 it uses the federal formula as it stood before the 2025 federal law changed it (verify): 35% of up to $3,000 of expenses for one qualifying person or $6,000 for two or more, with the percentage falling by one point per $2,000 of income over $15,000 to a floor of 20% at $43,000. The maximum is $1,050 for one child and $2,100 for two or more (verify). The Minnesota credit is then reduced by 5% of AGI over $65,610 and is gone at $77,610 for one child or $89,610 for two or more (verify). The expenses are the same ones that qualify federally: day care, preschool, before- and after-school care, summer day camp, a nanny, for a child under 13 or a disabled dependent or spouse, so that the parents can work. The provider’s name, address and tax ID go on the schedule. Expenses paid through an employer dependent care account are excluded here as they are federally.
School expenses: the K-12 credit and the K-12 subtraction
Minnesota is one of the few states that helps with the cost of a child’s schooling, and it does it two ways. The same dollar cannot go on both, so the choice is made expense by expense.
| K-12 Education Credit (Schedule M1ED) | K-12 Education Subtraction (Schedule M1M) | |
|---|---|---|
| Worth | 75% of qualifying expenses, up to $1,500 per child; refundable | A subtraction from income of up to $1,625 per child in grades K–6 and $2,500 in grades 7–12; worth 5.35% to 9.85% of the amount in tax |
| Income limit | Full at AGI of $77,550 or less; phased out by $83,550 for one or two children, $86,550 for three, $3,000 more per additional child | None |
| Private school tuition | No | Yes |
| Supplies, textbooks, tutoring, instrument rental, music lessons, academic camps, driver’s education at school | Yes | Yes |
| Computer hardware and educational software | Up to $200 a family (verify) | Up to $200 a family |
| Filing status | Not for married filing separately | Any |
For a family under the income limit, the credit is worth far more: $1,000 of supplies and tutoring is a $750 credit, against $54 of tax saved by the subtraction at 5.35%. Over the limit, the subtraction is the only choice. Private school tuition always goes on the subtraction.
Keep the receipts by child and by expense type. Textbooks, a rented clarinet, after-school tutoring and a summer academic camp qualify; sports equipment, uniforms, lunches and transportation do not. K-12 tuition paid from a 529 account does not qualify for the subtraction, the 529 earnings used that way are added back to Minnesota income, and any 529 credit or subtraction on the contributions is recaptured. Pay K-12 tuition from ordinary savings and leave the 529 for college.
The dependent exemption and head of household
Minnesota has no personal exemption for the taxpayer or spouse, but it allows $5,300 for each dependent, phased out above $366,700 of AGI on a joint return, $305,600 for head of household, $244,500 single and $183,350 married separate. It comes off after the standard deduction, so a single parent with two children takes $23,000 as head of household plus $10,600 of exemptions, $33,600 in all, before the first dollar is taxed at 5.35%.
Head of household in Minnesota follows the federal status: an unmarried parent who paid more than half the cost of keeping up the home for a qualifying child. The Minnesota standard deduction for head of household is $23,000 against $15,300 for a single filer, and the 5.35% bracket runs to $41,010 of taxable income against $33,310. Two things do not follow. The child and Working Family Credit phase-out for head of household starts at $32,680, the same line as single, not the joint $38,770; and the K-12 credit and dependent care credit limits are the same for every filing status. Divorced or separated parents should know that the Minnesota credits follow the federal dependency: whoever claims the child federally claims the $5,300 exemption, the $1,800 credit and the K-12 expenses for that child on the Minnesota return. See Head of household and The EITC and divorced parents for the federal rules Minnesota borrows.
The Renter’s Credit
Since tax year 2024 renters claim the Renter’s Credit on Schedule M1RENT with the income tax return, where the old renter’s refund on Form M1PR used to be. It treats 17% (verify) of the rent paid as property tax, and the credit is the amount by which that exceeds a percentage of household income, less a share the renter is expected to bear, read from a table. The maximum is $2,780 for household income under about $6,800, falling in steps to $2,290 for income between $29,470 and $63,469, then quickly to $270 at $77,070, and nothing at $79,330 or more. Household income for this purpose is broader than AGI: it adds nontaxable Social Security, the nontaxable part of pensions, public assistance and some other items, and it subtracts a dependent allowance. The landlord must issue a Certificate of Rent Paid (CRP) by January 31, one per renter on the lease, and the credit cannot be claimed without it; a landlord who does not provide one can be reported to the Department of Revenue, which can issue a substitute. Homeowners use Form M1PR instead, a separate return due August 15, for the Homestead Credit Refund.
Worked example: a family of four who rent
Married, two children ages 5 (kindergarten) and 9 (grade 3). Wages of $46,000, no other income, so AGI is $46,000. They pay $1,500 a month in rent, $6,000 for after-school and summer care for the two children, and $800 for school supplies and a tutor. Minnesota withholding of $900. They take the standard deduction.
| Federal AGI (Form M1 line 1) | $46,000 |
| Minnesota standard deduction, married joint | −$30,600 |
| Dependent exemptions: 2 × $5,300 | −$10,600 |
| Minnesota taxable income | $4,800 |
| Tax at 5.35% | $257 |
| Child Tax Credit: 2 × $1,800 | $3,600 |
| Working Family Credit: 4% of $9,690 | $388 |
| Phase-out: 12% of ($46,000 − $38,770) | −$868 |
| Child and Working Family Credit after phase-out | $3,120 |
| Child and Dependent Care Credit: 20% of $6,000 | $1,200 |
| K-12 Education Credit: 75% of $800 | $600 |
| Renter’s Credit: 17% of $18,000 is $3,060; less 2.0% of income ($920); 70% of the rest | $1,498 |
| Total refundable credits | $6,418 |
| Withholding | $900 |
| Refund | $7,061 |
The family paid $257 of Minnesota tax and received $6,418 of credits. The child credit does most of the work, and it is also the most fragile: another $5,000 of wages would cost $600 of it. Had the family owned their home instead of renting, the Renter’s Credit would drop out and they would file Form M1PR in August for the Homestead Credit Refund, with household income of $46,000 and the same two dependents.
529 plans and college
Contributions to any state’s 529 plan, not only the Minnesota College Savings Plan, earn one of two things on Schedule M1529: a subtraction of up to $1,500 ($3,000 joint), or a nonrefundable credit of 50% of contributions up to $500, full at AGI of $98,410 or less and phased out by $123,410 for single filers; joint filers keep a reduced credit up to $202,140. For a family under $98,410, $1,000 into the account is a $500 credit; the subtraction on the same $1,000 is worth $54 to $68. Take the credit when you qualify. Spent on K-12 tuition, the money triggers the add-back and recapture described above, and a withdrawal for postsecondary credentialing programs, newly allowed federally, is added back on the Minnesota return for 2026.
Minnesota has no tuition credit of its own, and the federal education credits do not affect the Minnesota return. The Student Loan Credit on Schedule M1SLC, up to $500 per person, nonrefundable, is for a graduate paying on his or her own loans, and a married couple each paying on their own loans can claim $1,000. Employer payments on an employee’s student loans, which the 2025 federal law made permanently tax-free, are taxable in Minnesota for 2026 and are added back on Schedule M1M (verify).
The Marriage Credit
Because the joint brackets are not exactly double the single ones, two earners can pay more as a couple than as two singles. The Marriage Credit on Schedule M1MA, nonrefundable and figured from a table, offsets part of that for joint filers where the lower-earning spouse has at least $31,000 of earned income, pension or taxable Social Security; the maximum for 2026 is $1,894 (verify). It is easy to miss if the software is not told which spouse earned what.
Behind the scenes
The Child Tax Credit was created in the 2023 tax bill, at $1,750 per child with the 12% phase-out, and the Working Family Credit was rebuilt in the same bill from a percentage of the federal EITC into a flat 4% of early earnings plus fixed amounts for older dependents. The design is deliberate: the dollars go to families under roughly $50,000, and almost none to the middle. The Legislature chose a steep phase-out over a smaller credit spread wider. The Department of Revenue later added the advance-payment option so that families would not wait until spring for all of it.
The 2025 federal law expanded the federal dependent care credit for 2026. Minnesota, which had tied its own credit to the federal formula, decoupled in the 2026 tax bill and kept the older formula. The Minnesota credit remains refundable, which the federal one is not, so for a family that owes no federal tax the Minnesota version is still the one that pays. The K-12 credit and subtraction are older than all of this; they date to 1997 (verify) and were the state’s answer to the school-choice debate of that decade, with tuition allowed on the subtraction and kept off the credit as the compromise.
What to bring
- Every W-2 and 1099 for both parents, and the dates of birth and Social Security numbers or ITINs for each child
- Any letter from the Department of Revenue about advance Child Tax Credit payments, with the amounts received
- Child care provider statements with the provider’s name, address and tax ID, and the amount paid per child
- School expense receipts by child and grade: supplies, tutoring, instrument rental, music lessons, academic camps, computer hardware and software, and private school tuition
- The Certificate of Rent Paid from the landlord, one per renter on the lease
- 529 contribution statements, to any state’s plan, and any 529 withdrawal statements
- Student loan payment records (Form 1098-E and the servicer’s annual statement) for loans in your own name
- For a custody arrangement: the divorce decree or Form 8332, so the child goes on the right return
- For a dependent 18 to 24: proof of enrollment or disability
Questions people ask
How much is the Minnesota Child Tax Credit for 2026?
$1,800 for each child under 18, refundable, with no limit on the number of children and no earned income requirement. It is reduced, together with the Working Family Credit, by 12% of income above $38,770 on a joint return or $32,680 for other filers, so a family with one child loses it entirely at about $56,000 joint.
Do I need a Social Security number to claim it?
No. A parent filing with an ITIN, and a child with an ITIN, can claim the Minnesota Child Tax Credit and the Working Family Credit. The federal child tax credit requires a Social Security number for the child; the Minnesota one does not.
Should I take the advance payments?
If your income is steady and under the phase-out, the advance payments are simply half the credit earlier. If your income may rise during the year, or your custody arrangement may change, wait for the return; a family that received advances on a credit it no longer qualifies for has to repay them, and anyone who took advances must file even with no income.
Can I claim my child’s private school tuition?
On the K-12 subtraction, yes, up to $1,625 for grades K–6 and $2,500 for grades 7–12, with no income limit. Not on the K-12 credit; the credit covers supplies, tutoring, instruments and the like, at 75% up to $1,500 per child, for families under about $83,550 of AGI.
I’m a single parent. Which lines are different for me?
As head of household your standard deduction is $23,000 and the 5.35% bracket runs to $41,010. The child credit phase-out starts at $32,680 for you, not the joint $38,770. Everything else, the $5,300 exemption, the care credit, the K-12 credit, the renter’s credit, is the same.
My landlord has not given me a Certificate of Rent Paid. What now?
Landlords must issue the CRP by January 31. Ask in writing first. If it does not come, contact the Department of Revenue, which can issue a Rent Paid Affidavit in its place once you show the rent you paid. The credit cannot be claimed without one or the other.
File the return even when no tax is due
The child, working family, care, K-12 and renter’s credits are all refundable and all live on the Minnesota return; a family under $50,000 that does not file leaves thousands on the table.
Written by Charles Trautman, EA, editor · Need to Know Tax, Lone Tree, Colorado
Questions about this article in Minnesota are answered by [your practice name] · [your phone] · [your email address]. We’re looking for an EA or CPA in each Minnesota city to hold that city’s seat and take this spot — is that you?
An invitation to Minnesota EAs and CPAs
These Minnesota pages were written by the editor from the Minnesota Department of Revenue’s own publications, and they need a Minnesota practitioner’s eye. One enrolled agent or CPA in each Minnesota city holds that city’s seat: reads these pages before the filing season and is credited as a reviewer, is named on every page of their city’s edition, and answers its readers’ questions. $1,000 for the 2026 season, the charter price. Take your city’s seat (a two-minute form and a card), tell us you’re interested, write to editor@needtoknowtax.com, or read how it works.