Bill Text: NJ S1482 | 2024-2025 | Regular Session | Introduced
Bill Title: Expands eligibility for State gross income tax credit for child and dependent care expenses and increases amount of credit.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-09 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S1482 Detail]
Download: New_Jersey-2024-S1482-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Senator JOSEPH A. LAGANA
District 38 (Bergen)
SYNOPSIS
Expands eligibility for State gross income tax credit for child and dependent care expenses and increases amount of credit.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning the State gross income tax credit for child and dependent care expenses, and amending P.L.2018, c.45.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. 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 meets the income eligibility requirements of this subsection and 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] For a married individual filing separately or an unmarried individual other than an individual filing as head of household or as surviving spouse for federal income tax purposes, 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.]
Not over $30,000 60% of federal credit
over $30,000 but not over $60,000 50% of federal credit
over $60,000 but not over $90,000 40% of federal credit
over $90,000 but not over $120,000 30% of federal credit
over $120,000 but not over $150,000 20% of federal credit.
For a married couple filing a joint return or an individual filing as head of household or as surviving spouse for federal income tax purposes, 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 $50,000 60% of federal credit
over $50,000 but not over $100,000 50% of federal credit
over $100,000 but not over $150,000 40% of federal credit
over $150,000 but not over $200,000 30% of federal credit
over $200,000 but not over $250,000 20% of federal credit.
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.] A married individual filing separately shall be eligible for the credit allowed pursuant to subsection a. of this section, provided that the individual meets the income eligibility criteria for single filers pursuant to subsection a. of this section, and provided that the individual would have been eligible for the credit allowed pursuant to section 21 of the Internal Revenue Code (26 U.S.C. s.21), except that the individual did not meet the joint filing requirement of paragraph (2) of subsection (e) of section 21 of the Internal Revenue Code (26 U.S.C. s.21). To be eligible for the credit allowed pursuant to subsection a. of this section, a married individual filing separately shall meet all requirements, except for the joint filing requirement, of the credit allowed pursuant to section 21 of the Internal Revenue Code (26 U.S.C. s.21).
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.
(cf: P.L.2021, c.308, s.1)
2. This act shall take effect immediately and shall apply to taxable years beginning on and after the date of enactment.
STATEMENT
This bill (1) expands eligibility for the credit against the New Jersey gross income tax for employment-related expenses incurred while caring for a child or dependent, and (2) increases the amount of the credit. Under current law, the New Jersey credit is available to resident taxpayers who are allowed the federal credit and have New Jersey taxable income of $150,000 or less for the taxable year, regardless of the taxpayer's filing status. The amount of the New Jersey credit allowed to a taxpayer is equal to a percentage of the federal credit allowed to the taxpayer for the taxable year.
The bill expands qualifying income brackets for taxpayers who are married filing jointly or filing as a head of household or as a surviving spouse for federal income tax purposes, and raises the $150,000 income eligibility limit to $250,000 for these taxpayers. Under the bill, the income limit would remain at $150,000 for all other filing statuses.
The bill also expands eligibility for the New Jersey credit to married individuals filing separately who (1) meet the income eligibility criteria for single filers under the bill and (2) would have been eligible for the federal credit except that those individuals did not meet the joint filing requirement. To be eligible for the New Jersey credit, the bill requires married individuals filing separately to meet all requirements, except for the joint filing requirement, of the federal credit.
Finally, the bill increases the amount of the New Jersey credit available to taxpayers. For example, under current law, a taxpayer with income less than $30,000 is allowed a New Jersey credit equal to 50 percent of the federal credit. The bill increases the amount of the New Jersey credit for taxpayers in this bracket to 60 percent of the federal credit, and the amount of the credit that can be claimed by all other brackets has also been increased by 10 percentage points.
