01-08-2025
Advance payments of Minnesota's child tax credit begin. Here's what you need to know.
Nearly 18,000 Minnesota families are receiving a portion of the state's child tax credit starting this week.
It's the first of three advance payments of what's touted as a nation-leading benefit aimed at reducing child poverty. The average direct deposit or check is nearly $450 and the state will send the other two payments at the end of September and November.
"I think for many families, this is going to be a game changer," said Paul Marquart, commissioner of the Minnesota Department of Revenue.
Tax filers could choose to opt in for advance payments earlier this year and those who did will receive the rest of the credit — which totals up to $1,750 per child — next spring. The amount families receive depends on their family size and household income. Higher wages mean a smaller credit.
Around 220,000 received the 2024 credit when filing their returns this year, according to department data.
Getting to cash in on part of the 2025 tax credit nine months earlier than tax season begins is a feature the Minnesota Legislature approved last year. It is similar to a move by the federal government when millions of families received six monthly payments of $250 to $300 per kid from July to December 2021.
The money amounted to half of the child tax credit authorized by the American Rescue Plan, a COVID-19 relief package.
Minnesota is the first of the 17 states with its own child tax credits to implement advance payments, Marquart said.
"We know that if we can do that, it just enhances the flexibility and increases the likelihood that you're going to have a reduction in child poverty," he told WCCO in an interview.
A recent study looking at the impact of cash assistance to poor families, reported by The New York Times this week, found that years of monthly payments of around $330 did not boost child well-being and the children whose families received the money in the experiment didn't fare better than those that did not see the extra funds.
Marquart said he hadn't seen the study, but Minnesota plans to chart the tax credit program's impact and keep tabs on if it's meeting its intended goals. The state has been working with Columbia University, which initially estimated Minnesota's credit would slash poverty by one-third, and has also approached the University of Notre Dame for a study, too.
"This is a significant investment. It's a significant priority for the state of Minnesota, and we need to be accountable as we're administering this program," he said.
In December, LeAndra Estis, who lives in St. Paul, told WCCO having the boost to her family budget because of the refundable tax credit is a huge relief as she tries to make ends meet for her family.
She is excited about the advance payments and is among those who opted in.
"It's good to have that back end of government assistance, but the reality of the programs are really to graduate you and help you to become self-sufficient, and the Minnesota tax credit — It's just another way of helping people to be self-sufficient," Estis said.
But advance payments aren't for everyone: choosing this option could count against a family's SNAP benefits. Taking the lump sum at tax time does not have the same effect.
The state launched an online calculator next month for SNAP recipients to see if it impacts them.
That's part of the reason Marquart believes only 8% of Minnesotans who qualify for the child tax credit chose to get a portion of it earlier, but he said he thinks that number will grow with time.
There are income limits in order to qualify for some of or the full $1,750 child tax credit in Minnesota. To get the maximum refund, income cannot exceed $29,500 for a single filer or $35,000 for married couples filing jointly.
The credit phases out completely for families with one child if their annual income is $54,534. But the threshold for the full phase-out increases with more children. For example, a couple with four children would still receive part of that credit if they make $90,000 a year.
