S4212

An Act expanding eligibility for the State child tax credit 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. (1) 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 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 credit shall be in the following amounts for each child that has not attained the age of six years:

If the taxable income is: The credit is:

$30,000 or under [$1,000] $2,000

over $30,000 but not over $40,000 [$800] $1,600

over $40,000 but not over $50,000 [$600] $1,200

over $50,000 but not over $60,000 [$400] $800

over $60,000 but not over $80,000 [$200] $400

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

(2) 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 attained the age of six years but who has not attained the age of 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 credit shall be in the following amounts:

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 $400

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.

(3) A taxpayer eligible to receive a credit for more than one child pursuant to this section shall not 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. in an amount greater than $2,500.

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.2023, c.72, s.1)

2. This act shall take effect immediately and shall apply to taxable years beginning on and after January 1, 2026.

STATEMENT

This bill increases the amount of the State child tax credit to resident taxpayers with children under age six. Additionally, this bill expands eligibility for the child tax credit to resident taxpayers with children ages six to 11.

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 $1,000 per child for taxpayers with incomes of $30,000 or less and is incrementally reduced as certain income thresholds above $30,000 are met. The credit is completely phased out once a taxpayer’s income exceeds $80,000.

This bill expands eligibility for the child tax credit to resident taxpayers with children between ages six and 11 by specifying that the credit is available to taxpayers with children who have attained the age of six but who have not attained the age of 12. Additionally, the bill provides an enhanced credit to resident taxpayers with children who have not attained the age of six. For taxpayers with children who have not attained the age of six, the amount of the tax credit would be doubled, so taxpayers with incomes of $30,000 or less would receive $2,000 per eligible child. However, under the bill, the maximum amount tax credits a taxpayer may receive is $2,500.

This bill takes effect immediately and applies to tax years beginning on and after January 1, 2026.