HF2304

Purpose of the Bill

The bill aims to establish a refundable tax credit for certain teachers in Minnesota. The credit is intended to provide financial support to teachers by reducing their tax liabilities, and it applies to both full-year and part-year teachers who meet specific criteria.

Main Provisions

• Eligibility Criteria:

  • The credit applies to teachers (kindergarten through grade 12) holding at least a 0.6 full-time equivalent position.
  • Teachers must possess a valid Tier 1, Tier 2, Tier 3, or Tier 4 teaching license issued by the Minnesota Professional Educator Licensing and Standards Board.
  • An "eligible full-year teacher" must have a minimum of 150 student contact days per school year, excluding non-teaching days like conferences and workshops.
  • An "eligible part-year teacher" must have at least 75 but fewer than 150 student contact days per school year, with similar exclusions.

• Credit Amounts:

  • Full-year teachers with an annual income below $60,000 receive a $15,000 tax credit.
  • Part-year teachers earning less than $30,000 receive a $7,500 tax credit.
  • Teachers earning above these thresholds receive a $2,000 tax credit.
  • Each spouse in a married couple can claim this credit if both are eligible.

• Refund and Adjustments:

  • If the credit exceeds a teacher's tax liability, the excess amount will be refunded.
  • Credit and income threshold amounts will adjust annually for inflation starting in the taxable year 2025.

• Employer Reporting:

  • Employers must provide teachers with a statement of qualifying wages and teaching days by January 15 each year. This statement must also be sent to the state commissioner.

• Advance Payments:

  • Eligible teachers may opt to receive advance payments of the credit based on estimates of the credit they will qualify for in the taxable year.
  • If advance payments exceed the final credit amount, the taxpayer’s liability will be adjusted to account for the difference.

Significant Changes

• This bill introduces a structured tax credit specifically targeted at licensed teachers, supporting them financially based on their income and teaching service days.
• It mandates new employer reporting requirements related to teacher wages and service days.

Relevant Terms

• Tax Credit
• Refundable Credit
• Full-Time Equivalent
• Professional Educator Licensing and Standards Board
• Teaching License
• Student Contact Days
• Inflation Adjustment