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HF4321 (Legislative Session 94 (2025-2026))

Individual income tax conformed to federal exclusion from gross income for dependent care assistance programs.

AI Generated Summary

Purpose

  • The bill aims to align Minnesota’s individual income tax treatment with the federal rules for dependent care benefits. Specifically, it conformes Minnesota law to the federal expansion of the exclusion from gross income for dependent care assistance programs.

Main Provisions

  • Amends Minnesota Statutes 2024, section 290.01, subdivision 31 to redefine Internal Revenue Code for purposes of Minnesota tax law.
  • Internal Revenue Code is updated to mean the IRC as amended through May 1, 2023, but with an important addition: it includes section 70404 of Public Law 119-21, which expands the exclusion from gross income for dependent care assistance programs.
  • The bill also states that uncodified provisions in federal law that relate to provisions of the Internal Revenue Code that Minnesota law adopts are included.

What changes

  • Minnesota will conform its tax treatment to the federal expansion of the dependent care exclusion. This is achieved by incorporating the federal expansion (via Public Law 119-21, Section 70404) into Minnesota’s definition of the Internal Revenue Code for purposes of state income tax.
  • The change also ensures that any related uncodified federal provisions connected to the IRC are incorporated into Minnesota law.

Implications and Potential Impact

  • Tax treatment for individuals receiving dependent care benefits may be more favorable under Minnesota law, mirroring federal provisions.
  • The change provides clearer guidance for taxpayers and the Department of Revenue by aligning state rules with updated federal rules.

Implementation and Definitions

  • Clarifies that the Internal Revenue Code, for Minnesota purposes, is the version amended through May 1, 2023, plus the specified federal expansion for dependent care benefits.
  • Explicitly includes the expansion of the dependent care exclusion (dependent care assistance programs) from Public Law 119-21, Section 70404, in the Minnesota framework.

Significant Changes to Existing Law

  • Replaces or supplements prior state definitions of the Internal Revenue Code with one that includes the federal expansion for dependent care benefits.
  • Broadens the set of federal provisions incorporated into Minnesota law through uncodified federal provisions related to the IRC.

Relevant Terms - Internal Revenue Code - Internal Revenue Code as amended through May 1, 2023 - Public Law 119-21 - Section 70404 - expansion of the exclusion from gross income for dependent care assistance programs - dependent care assistance programs - Minnesota Statutes 2024 section 290.01 subdivision 31 - uncodified provisions - conforming to federal exclusion from gross income - dependent care benefits - Minnesota income tax

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 16, 2026HouseActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Definition of Internal Revenue Code to include section 70404 of Public Law 119-21 and related uncodified federal provisions incorporated into Minnesota law."
      ],
      "removed": [],
      "summary": "This bill conforming Minnesota individual income tax treatment to the federal exclusion from gross income for dependent care assistance programs by amending Minnesota Statutes 2024, section 290.01, subdivision 31 to define the Internal Revenue Code as amended through May 1, 2023 and to include references to the federal provisions enacted in Public Law 119-21, §70404.",
      "modified": [
        "Updates the definition in subdivision 31 to reflect the expansion of the dependent care exclusion under the Internal Revenue Code as implemented by federal law."
      ]
    },
    "citation": "Minnesota Statutes 2024, section 290.01, subdivision 31",
    "subdivision": "subd. 31"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Cites federal law related to the expansion of the dependent care assistance program exclusion, referenced in the bill as Public Law 119-21, §70404.",
      "modified": []
    },
    "citation": "Public Law 119-21, §70404",
    "subdivision": ""
  }
]

Progress through the legislative process

17%
In Committee

Sponsors

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