Bill Text: NJ A3858 | 2022-2023 | Regular Session | Introduced
Bill Title: Revises gross income tax credit for child and dependent care expenses.
Spectrum: Partisan Bill (Democrat 4-0)
Status: (Introduced - Dead) 2022-05-09 - Introduced, Referred to Assembly Women and Children Committee [A3858 Detail]
Download: New_Jersey-2022-A3858-Introduced.html
Sponsored by:
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Assemblyman ANTHONY S. VERRELLI
District 15 (Hunterdon and Mercer)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
SYNOPSIS
Revises gross income tax credit for child and dependent care expenses.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning the gross income tax credit for child or dependent care expenses, 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 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 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.]
Not over $50,000 50% of federal credit
over $50,000 but not over $75,000 40% of federal credit
over $75,000 but not over $100,000 30% of federal credit
over $100,000 but not over $125,000 20% of federal credit
over $125,000 but not over $150,000 10% of federal credit.
The credit allowed by this section for a taxable year shall not exceed $1,000 for employment-related expenses paid by the taxpayer for one qualifying individual and $2,000 for employment-related expenses paid by the taxpayer for two or more qualifying individuals. The $150,000 income limit set forth in this subsection shall apply to taxpayers of any filing status.
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.]
A credit allowed pursuant to this section shall not reduce the tax liability
otherwise due pursuant to N.J.S.54A:1-1 et seq. for a taxable year to an amount
less than zero.
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.
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 makes changes to the credit against the New Jersey gross income tax for employment-related expenses incurred while caring for a child or dependent. Currently, the credit is refundable and available to resident taxpayers who are allowed the federal child and dependent care credit and have New Jersey taxable income of $150,000 or less for the taxable year.
The bill: (1) makes the credit nonrefundable; (2) sets a limit on the maximum credit allowed for a taxable year to $1,000 for employment-related expenses paid by the taxpayer for one qualifying individual and $2,000 for employment-related expenses paid by the taxpayer for two or more qualifying individuals; and (3) increases the amount of the State credit available to taxpayers by expanding qualifying income brackets. For example, under current law, an eligible taxpayer with income less than $30,000 is allowed a credit equal to 50 percent of the taxpayer's federal credit. The bill increases the $30,000 income limit to $50,000, and all other brackets have also been expanded to allow more taxpayers to qualify for enhanced benefits.
