New Jersey-2024-S3382-Introduced

An Act allowing a gross income tax credit for certain child care providers and supplementing Title 54A of New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. The Legislature finds and declares that:

a. Even before the start of the coronavirus disease 2019 (COVID-19) pandemic, New Jersey's child care industry struggled to find and retain teaching staff due to chronically low wages paid to child care employees.

b. Since the COVID-19 pandemic, child care programs throughout New Jersey are not only losing teachers and assistant teachers but are struggling to find qualified staff to take their places.

c. Over the last year, the responsibilities of child care teachers have become increasingly demanding and complex, yet many child care programs cannot afford to compensate their teachers above a minimum wage.

d. While the Department of Human Services has increased State child care subsidy rates and continues to pay child care programs based on the number of children enrolled rather than attendance, the State's child care system has been inadequately funded for so long that any additional financial assistance is often not reflected in augmented wages for child care program staff.

e. Without sufficient staffing, child care programs cannot adequately care for and educate the number of children needing care, which directly impacts their parents' ability to participate in the workforce.

f. In order to address the State's child care staffing crisis and to ensure the continued success of child care programs and the teaching staff who care for, educate, and support the low-income families, it is in the best interest of the State to provide direct relief to financially struggling child care program employees.

2. a. A credit against the tax otherwise due for the taxable year under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., shall be allowed on the New Jersey gross income of any staff member working for a child care provider, licensed pursuant to the "Child Care Center Licensing Act," P.L.1983, c.492 (C.30:5B 1 et seq.), who directly supervise children as defined in N.J.A.C. 3A:52-4.3 and any family day care provider, registered by a family day care sponsoring organization pursuant to the "Family Day Care Provider Registration Act," P.L.1987, c.27 (C.30:5B-16 et seq.), who has been employed by a licensed child care provider or worked as a registered family day care provider in their current position for a continuous six month period during the taxable year.

b. (1) For a staff member working for a child care provider who directly supervises children or registered family day care provider with an individual gross income:

(a) of less than $25,000, the amount of the credit shall be equal to $1,000 for providing child care services to children 30 months of age or older, and $1,500 for providing child care services to children from birth to the age of 30 months;

(b) between $25,000 and $35,000, the amount of the credit shall be equal to $750 for providing child care services to children 30 months of age or older, and $1,000 for providing child care services to children from birth to the age of 30 months; and

(c) between $35,001 and $45,000, the amount of the credit shall be equal to $500 for providing child care services to children 30 months of age or older, and $750 for providing child care services to children from birth to the age of 30 months.

(2) The amount of credit allowed on the gross income of a staff member working for a child care provider who directly supervises children or registered family day care provider for providing child care services to children from birth to the age of 30 months shall only apply to a staff member or provider who spends at least 50% of the classroom teacher's or provider's employment time providing such services.

c. (1) For a staff member working for a child care provider who directly supervises children and registered family day care provider who has a gross income for the taxable year of less than $45,000: if the amount of credit allowed pursuant to this section for the taxable year, together with any other payments or credits against the tax, reduces the tax liability otherwise due for the taxable year to zero, any amount of credit remaining shall be paid to the taxpayer as a refund of an overpayment of tax pursuant to N.J.S.54A:9-7, provided that subsection (f) of N.J.S.54A:9-7 shall not apply.

(2) For a staff member working for a child care provider who directly supervises children and registered family day care provider who has a gross income for the taxable year of $45,000: if the amount of credit allowed pursuant to this section for the taxable year, together with any other payments or credits against the tax, reduces the tax liability otherwise due for the taxable year to zero, any amount of credit remaining shall be carried forward to the next taxable year. No portion of a credit shall carry forward to more than the next taxable year following the year in which the credit is first allowed.

d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the gross income tax for the taxable year shall be as prescribed by the Director of the Division of Taxation in the Department of the Treasury.

e. A credit allowed pursuant to this section shall not be taken into account as income or receipts for purposes of determining the eligibility of a taxpayer for benefits or assistance or the amount or extent of benefits or assistance under any State program and, to the extent permitted by federal law, under any State program financed in whole or in part with federal funds.

3. This act shall take effect immediately and apply to taxable years beginning January 1 next following enactment.

STATEMENT

This bill allows a gross income tax credit for staff members employed by a licensed child care provider who directly supervise children and for registered family day care providers who, as applicable, have been employed by a child care provider or worked as a registered family day care provider for a continuous six month period during the taxable year.

The credit amount varies depending on the staff member's or registered family day care provider's income: (1) for incomes of less than $25,000, the amount of the credit will be equal to $1,000 for providing child care services to children 30 months of age or older, and $1,500 for providing child care services to children from birth to the age of 30 months; (2) for incomes between $25,000 and $35,000, the amount of the credit will be equal to $750 for providing child care services to children 30 months of age or older, and $1,000 for providing child care services to children from birth to the age of 30 months; and (3) for incomes between $35,001 and $45,000, the amount of the credit will be equal to $500 for providing child care services to children 30 months of age or older, and $750 for providing child care services to children from birth to the age of 30 months.

For staff members working for a child care provider who directly supervise children and for registered family day care providers who provide child care services to children from birth to the age of 30 months, the tax credit will only apply if the staff member or family day care provider spends at least 50% of the staff member's or family day care provider's employment time providing such services.

For staff members and registered family day care providers with less than $45,000 of gross income, the credit is refundable: if the staff member or provider has no tax liability to against which the credit may be applied, the staff member or provider will receive the remaining credit amount from the State in cash. For a staff member or provider with an income of $45,000, any remaining credit may be carried forward to the next taxable year, but may not be carried forward beyond that.

The credit allowed by this bill cannot be taken into account as income or receipts for the purposes of determining the eligibility of a taxpayer for benefits or assistance or for the purposes of determining the amount or extent of benefits or assistance under any State benefits or assistance program, including programs financed in whole or in part with federal funds.