S2842

An Act providing a tax credit for a portion of qualifying educational expenditures and supplementing chapter 4 of Title 54A of the New Jersey Statutes.

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

1. a. A taxpayer shall be allowed a credit against the tax due pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq. equal to 25 percent of a qualified educational expenditure made by the taxpayer for a qualifying dependent child during the taxable year. The amount of the credit provided for each qualified educational expenditure shall not exceed $500 per qualifying dependent child.

b. As used in this section:

“Nonpublic school” means an elementary or secondary school within the State, other than a public school, offering education in grades kindergarten through 12 or any combination thereof, wherein a child may legally fulfill compulsory school attendance requirements and which complies with the requirements of Title VI of the Civil Rights Act of 1964 (Pub.L.88-352).

“Qualified dependent child” means an individual under 18 years of age at the end of the taxable year for whom the taxpayer can claim a dependent deduction pursuant to subsection (b) of N.J.S.54A:3-1.

“Qualified educational expenditure” means an expense incurred by the taxpayer for:

(1) tuition at an accredited nonpublic school offering any combination of grades kindergarten through 12;

(2) school supplies required as part of a course of study such as binders; book bags; calculators; cellophane tape; blackboard chalk; compasses; composition books; crayons; erasers; folders, including expandable folders, pocket folders, plastic folders, and manila folders; glue, paste, and paste sticks; highlighters; index cards; index card boxes; legal pads; lunch boxes; markers; notebooks; paper, including loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper; pencil boxes and other school supply boxes; pencil sharpeners; pencils; pens; protractors; rulers; scissors; and writing tablets;

(3) required instructional materials used to learn the subject matter being taught as part of a course of study such as textbooks, workbooks, reference books, and the purchase of computer software whose primary purpose is for teaching or self-learning;

(4) annual school fees;

(5) transportation of the qualified dependent child to a nonpublic school provided that payment for transportation is made directly to the nonpublic school and the child is not eligible for transportation services furnished by a board of education pursuant to N.J.S.18A:39-1;

(6) payment of dues or purchases of materials, equipment, or special clothing for participation in extracurricular activities such as sporting events, musicals, plays, concerts, homecoming, prom or other similar event;

(7) rental of a musical instrument and purchases of music books, sheet music, or lessons as part of the child’s enrollment in a music course; or

(8) fees to attend a school field trip occurring during school hours.

For purposes of this section, “qualified education expenditure” does not include expenses incurred by the taxpayer for:

(1) private instruction or tutoring services;

(2) the annual school yearbook;

(3) class rings;

(4) clothing for everyday use; or

(5) testing fees for the Scholastic Aptitude Test (SAT), Preliminary Scholastic Aptitude Test (PSAT), or American College Test (ACT).

2. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2023.

STATEMENT

This bill would provide a gross income tax credit to a taxpayer in an amount equal to 25 percent of each qualified educational expenditure made by the taxpayer for a dependent child during the taxable year. The amount of the credit provided for each qualified educational expenditure shall not exceed $500 per qualifying dependent child. The bill defines “qualified education expenditure” as expenses incurred by the taxpayer for:

· tuition at a nonpublic school offering any combination of grades kindergarten through 12;

· school supplies required as part of a course of study such as binders; book bags; calculators; cellophane tape; blackboard chalk; compasses; composition books; crayons; erasers; folders, including expandable folders, pocket folders, plastic folders, and manila folders; glue, paste, and paste sticks; highlighters; index cards; index card boxes; legal pads; lunch boxes; markers; notebooks; paper, including loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper; pencil boxes and other school supply boxes; pencil sharpeners; pencils; pens; protractors; rulers; scissors; and writing tablets;

· required instructional materials used to learn the subject matter being taught as part of a course of study such as textbooks, workbooks, reference books, and the purchase of computer software whose primary purpose is for teaching or self-learning;

· annual school fees;

· transportation of the qualified dependent child to a nonpublic school provided that payment for transportation is made directly to the nonpublic school and the child is not eligible for transportation services furnished by a board of education under State law;

· payment of dues or purchases of materials, equipment, or special clothing for participation in extracurricular activities such as sporting events, musicals, plays, concerts, homecoming, prom or other similar event;

· rental of a musical instrument and purchases of music books, sheet music, or lessons as part of the child’s enrollment in a music course; and

· fees to attend a school field trip occurring during school hours.

For purposes of defining which nonpublic school payments qualify for a credit under the bill, a “nonpublic school” is defined as an elementary or secondary school within the State, other than a public school, offering education in grades K-12 or any combination thereof, wherein a child may legally fulfill compulsory school attendance requirements and which complies with the requirements of Title VI of the Civil Rights Act of 1964.

A “qualified educational expenditure” would not include expenses incurred by the taxpayer for private instruction or tutoring services, the annual school yearbook, class rings, clothing for everyday use, and testing fees for the Scholastic Aptitude Test (SAT), Preliminary Scholastic Aptitude Test (PSAT), or American College Test (ACT).