Bill Text: NJ A5514 | 2026-2027 | Regular Session | Introduced
Bill Title: Allows gross income tax deduction for employment-related childcare expenses.
Sponsorship: Partisan Bill (Republican 1)
Status: (Introduced) 2026-09-17 - Introduced, Referred to Assembly Children, Families and Food Security Committee [A5514 Detail]
Download: New_Jersey-2026-A5514-Introduced.html
Sponsored by:
Assemblywoman DAWN FANTASIA
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Allows gross income tax deduction for employment-related childcare expenses.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing a gross income tax deduction for employment-related childcare expenses, supplementing Title 54A of the New Jersey Statutes, and amending P.L.2018, c.45.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) a. A taxpayer shall be allowed to deduct from the taxpayer's gross income an amount equal to the employment-related expenses for dependent care services paid by the taxpayer during the taxable year.
b. Any expenses for which a credit is claimed pursuant to section 5 of P.L.2018, c.45 (C.54A:4-17) shall not be allowed as a deduction for the purposes of this section.
c. As used in this section:
"Dependent care services" means services for the care of a dependent of the taxpayer who has not attained age 13.
"Employment-related expenses" means the same as defined in section 21 of the Internal Revenue Code (26 U.S.C. s. 21), except not including expenses for household services.
2. Section 5 of P.L.2018, c.45 (C.54A:4-17) is amended to read as follows:
5. a. A resident taxpayer with New Jersey taxable income of $150,000 or less who is allowed a credit for expenses for household and dependent care services for federal income tax purposes pursuant to section 21 of the Internal Revenue Code (26 U.S.C. s.21) shall be allowed a credit against the tax otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. The credit shall be in an amount equal to a percentage of the credit allowed the taxpayer for federal income tax purposes for the taxable year, according to the following schedule:
NJ taxable income is: Amount of
NJ credit is:
Not over $30,000 50% of federal credit
over $30,000 but not over $60,000 40% of federal credit
over $60,000 but not over $90,000 30% of federal credit
over $90,000 but not over $120,000 20% of federal credit
over $120,000 but not over $150,000 10% of federal credit.
The $150,000 income limit set forth in this subsection shall apply to taxpayers of any filing status.
b. If the amount of the credit allowed pursuant to this section exceeds the amount of gross income tax otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., the amount of excess shall be treated as a refundable overpayment.
c. Married couples shall file a joint return in order to claim the credit provided by this section. A taxpayer eligible to receive a credit pursuant to paragraph (3) or (4) of subsection (e) of section 21 of the federal Internal Revenue Code (26 U.S.C. s.21) shall be eligible for the credit provided by this section, provided the taxpayer satisfies the income limit set forth in subsection a. of this section.
d. In the case of a part-year resident claimant, the amount of the credit allowed pursuant to this section shall be pro-rated, based upon that proportion which the total number of months of the claimant's residency in the taxable year bears to 12 in that period. For this purpose, 15 days or more shall constitute a month.
e. Notwithstanding any provision of this section to the contrary, any expenses for which a deduction is claimed pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be allowed as a credit for the purposes of this section.
(cf: P.L.2021, c.308, s.5)
3. This act shall take effect immediately and apply to taxable years beginning on or after January 1 of the year next following the date of enactment.
STATEMENT
This bill allows taxpayers to claim a gross income tax deduction for all employment-related expenses incurred for dependent care services.
Under federal law, certain taxpayers are allowed a federal income tax credit for a portion of the employment-related expenses incurred on behalf of a qualifying individual. A qualifying individual includes dependents who are children under 13 years, as well as a dependent or spouse who is physically or mentally incapable of caring for themselves. Federal tax law generally defines "employment-related expenses" to include amounts paid to enable the taxpayer to be gainfully employed, including expenses for household services and for the care of a qualifying individual.
Under current law, the State also allows a gross income tax credit based on a percentage of the federal dependent care credit received by an eligible taxpayer. To be eligible for the gross income tax credit, a taxpayer may not have a taxable income of more than $150,000. Based on the taxpayer's income, the allowable State credit ranges from 10 percent to 50 percent of the federal credit.
Aside from the existing gross income tax credit, this bill allows all taxpayers to claim a gross income tax deduction for employment-related expenses incurred for dependent care services. Under the bill, allowable employment-related expenses would be determined in the same manner as under federal tax law, except that the deduction may not be claimed for expenses for household services (e.g. services for a cook, maid, or housekeeper). Additionally, the deduction may only be claimed for employment-related expenses incurred for the care of a dependent child under the age of 13 years.
However, the bill provides that a taxpayer may not claim the deduction for any expense for which the taxpayer also claims the existing dependent care tax credit.
