A3428

An Act expanding the provision of tax credits under the New Jersey Child Tax Credit program and amending P.L.2022, c.24.

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

1. Section 1 of P.L.2022, c.24 (C.54A:4-17.1) is amended to read as follows:

1. a. A resident taxpayer with New Jersey taxable income of $80,000 or less 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. for each child who has not attained the age of [six] 12 years as of the close of the taxable year and for which the taxpayer is allowed a deduction under N.J.S.54A:3-1.

[The] For taxable years beginning on or after January 1, 2023 and ending on December 31, 2024, the credit shall be in the following amounts for each child under age six:

If the taxable income is: The credit is:

$30,000 or under $750

over $30,000 but not over $40,000 $650

over $40,000 but not over $50,000 $550

over $50,000 but not over $60,000 $400

over $60,000 but not over $80,000 $200

For taxable years beginning on or after January 1, 2025, the credit shall be in the following amounts for each child under age six:

If the taxable income is: The credit is:

$30,000 or under $1,000

over $30,000 but not over $40,000 $800

over $40,000 but not over $50,000 $600

over $50,000 but not over $60,000 $500

over $60,000 but not over $80,000 $300

For taxable years beginning on or after January 1, 2023 and ending on December 31, 2024, the credit shall be in the following amounts for each child ages six through 11:

If the taxable income is: The credit is:

$30,000 or under $500

over $30,000 but not over $40,000 $400

over $40,000 but not over $50,000 $300

over $50,000 but not over $60,000 $200

over $60,000 but not over $80,000 $100

For taxable years beginning on or after January 1, 2025, the credit shall be in the following amounts for each child ages six through 11:

If the taxable income is: The credit is:

$30,000 or under $600

over $30,000 but not over $40,000 $500

over $40,000 but not over $50,000 $400

over $50,000 but not over $60,000 $300

over $60,000 but not over $80,000 $200

The income limit set forth in this section shall apply to taxpayers of any filing status.

b. A taxpayer shall be allowed the credit pursuant to this section whether the taxpayer uses a Social Security number or an Individual Taxpayer Identification Number on their tax forms.

c. If the amount of the credit allowed pursuant to this section exceeds the amount of tax otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., after all other credits and deductions, the amount of excess shall be treated as a refundable overpayment.

d. To qualify for the credit allowed pursuant to this section, a taxpayer shall file a joint return if the taxpayer is married, except for a taxpayer who files as a head of household or surviving spouse for federal income tax purposes for the taxable year.

e. In the case of a part-year resident, 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 taxpayer's residency in the taxable year bears to 12 in that period. For this purpose, 15 days or more shall constitute a month.

f. Any tax credit pursuant to this section shall not be taken into account as income for purposes of determining the eligibility of an individual 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.

g. The Division of Taxation shall issue data as part of the annual tax expenditure report, as required by section 1 of P.L.2009, c.189 (C.52:27B-20a) to include the number of taxpayers claiming the New Jersey Child Tax Credit, as well as claimants' income, the number of children benefitting, and the average credit amount per child and per claimant.

(cf: P.L.2022, c.24, s.1)

2. This act shall take effect immediately.

STATEMENT

This bill would provide a child tax credit for certain taxpayers with children ages six to 11 and increase the amount of the credit over a period of two years for taxpayers with children ages 11 and under.

Under current law, a resident taxpayer with New Jersey taxable income of $80,000 or less is allowed a credit against the State income tax for each child under age six. The amount of the credit is $500 per child if the taxpayer’s income is $30,000 or less and is incrementally reduced with respect to levels of income in excess of $30,000. The credit is completely phased out once a taxpayer’s income exceeds $80,000.

In addition to those taxpayers with children under age six, the bill expands eligibility for the child tax credit to taxpayers with children ages six to 11. The bill also increases the amount of the credit over a period of two years.

Taxpayers with an income under $30,000 and a child under age six would be eligible for a $750 credit for the 2023 and 2024 tax years with an incremental reduction of the credit for levels of income over $30,000 and a complete phase-out of the credit for incomes that exceed $80,000. For tax years beginning on or after January 1, 2025, the credit would increase to $1,000 for taxpayers with levels of income under $30,000 with an incremental reduction of the credit for levels of income over $30,000. The credit would continue to be completely phased out once a taxpayer exceeds $80,000 of income.

Taxpayers with an income of $30,000 or less with a child ages six to 11 would be eligible for a $500 credit for the 2023 and 2024 tax years with an incremental reduction of the credit for incomes over $30,000 and a complete phase-out of the credit for incomes that exceed $80,000. For tax years beginning on or after January 1, 2025, the credit would increase to $600 for those taxpayers with levels of income under $30,000 with an incremental reduction of the credit for levels of income over $30,000. The credit would continue to be completely phased out once the taxpayer’s income exceeds $80,000.