Bill Text: NJ A4082 | 2024-2025 | Regular Session | Introduced
Bill Title: Increases benefit amounts and expands eligibility under New Jersey earned income tax credit program.
Spectrum: Moderate Partisan Bill (Democrat 8-1)
Status: (Introduced) 2024-03-18 - Introduced, Referred to Assembly State and Local Government Committee [A4082 Detail]
Download: New_Jersey-2024-A4082-Introduced.html
Sponsored by:
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
Assemblywoman SHANIQUE SPEIGHT
District 29 (Essex and Hudson)
Co-Sponsored by:
Assemblyman Stanley, Assemblywomen Park, Murphy, Dunn and Assemblyman Karabinchak
SYNOPSIS
Increases benefit amounts and expands eligibility under New Jersey earned income tax credit program.
CURRENT VERSION OF TEXT
As introduced.
An Act increasing benefit amounts and expanding eligibility under the New Jersey earned income tax credit program, amending P.L.2000, c.80.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 2 of P.L.2000, c.80 (C.54A:4-7) is amended to read as follows:
2. There is established the New Jersey Earned Income Tax Credit program in the Division of Taxation in the Department of the Treasury.
a. (1) A resident individual who is eligible for a credit under section 32 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.32) shall be allowed a credit for the taxable year equal to a percentage, as provided in paragraph (2) of this subsection, of the federal earned income tax credit that would be allowed to the individual or the married individuals filing a joint return under section 32 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.32) for the same taxable year for which a credit is claimed pursuant to this section, subject to the restrictions [of this subsection and subsections b., c., d. and e. of this section] and [the] modifications of [paragraph (4) of] this [subsection] section.
(2) For the purposes of the calculation of the New Jersey earned income tax credit, the percentage of the federal earned income tax credit referred to in paragraph (1) of this subsection shall be:
(a) 10% for the taxable year beginning on or after January 1, 2000, but before January 1, 2001;
(b) 15% for the taxable year beginning on or after January 1, 2001, but before January 1, 2002;
(c) 17.5% for the taxable year beginning on or after January 1, 2002, but before January 1, 2003;
(d) 20% for taxable years beginning on or after January 1, 2003, but before January 1, 2008;
(e) 22.5% for taxable years beginning on or after January 1, 2008 but before January 1, 2009;
(f) 25% for taxable years beginning on or after January 1, 2009 but before January 1, 2010;
(g) 20% for taxable years beginning on or after January 1, 2010, but before January 1, 2015;
(h) 30% for taxable years beginning on or after January 1, 2015, but before January 1, 2016;
(i) 35% for taxable years beginning on or after January 1, 2016, but before January 1, 2018;
(j) 37% for the taxable year beginning on or after January 1, 2018, but before January 1, 2019;
(k) 39% for the taxable year beginning on or after January 1, 2019, but before January 1, 2020; and
(l) 40% for taxable years beginning on or after January 1, 2020, but before January 1, 2022;
(m) 41% for taxable years beginning on or after January 1, 2022, but before January 1, 2023;
(n) 42% for taxable years beginning on or after January 1, 2023, but before January 1, 2024;
(o) 43% for taxable years beginning on or after January 1, 2024, but before January 1, 2025;
(p) 44% for taxable years beginning on or after January 1, 2025, but before January 1, 2026; and
(q) 45% for taxable years beginning on or after January 1, 2026.
(3) (a) To qualify for the New Jersey earned income tax credit, if the claimant is married, except for a claimant who files as a head of household or surviving spouse for federal income tax purposes for the taxable year, the claimant shall file a joint return or claim for the credit.
(b) A taxpayer shall not be required to satisfy the joint filing requirement imposed pursuant to subparagraph (a) of this paragraph and section 32 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.32) if the taxpayer files as married filing separately and the taxpayer: (i) was living apart from the taxpayer's spouse on the last day of the taxable year for which the credit is claimed; (ii) was a victim of domestic abuse within the past three years; and (iii) indicates on the taxpayer's gross income tax return that the taxpayer meets the criteria set forth in this subparagraph. Calculation of the New Jersey earned income tax credit available to taxpayers pursuant to this paragraph shall be predicated on the federal maximum credit amount based on the filing status and number of qualifying children of the taxpayer for each taxable year beginning on and after January 1, 2022. For purposes of this subparagraph, "domestic abuse" means physical, psychological, sexual, or emotional abuse inflicted by the taxpayer's spouse, including, but not limited to, efforts to control, isolate, humiliate, and intimidate, or to undermine the taxpayer's or another member of the household's ability to reason independently.
(4) A resident individual who is at least 18 years of age or older, but cannot claim a qualifying child as defined under section 152 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.152) for the federal earned income tax credit, shall be eligible for the New Jersey earned income tax credit if that resident individual is ineligible to claim the federal earned income tax credit due to age requirements. The resident individual shall meet all qualifications, except for the minimum or maximum age, for the federal earned income tax credit in order to be eligible for the New Jersey earned income tax credit. Calculation of the New Jersey earned income tax credit available to individuals pursuant to this paragraph shall be predicated on the federal maximum amount for taxpayers with no qualifying child for each taxable year beginning on and after January 1, 2020.
(5) A taxpayer may claim a credit pursuant to this section whether the taxpayer has a Social Security number or an Individual Taxpayer Identification Number if, but for section 32(c)(1)(e) of the Internal Revenue Code (26 U.S.C. s.32), the taxpayer would be eligible to claim the federal earned income tax credit. Calculation of the New Jersey earned income tax credit available to individuals pursuant to this paragraph shall be predicated on the federal maximum credit amount based on the filing status and number of qualifying children of the individual for each taxable year beginning on and after January 1, 2022.
b. 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.
c. The amount of the credit allowed pursuant to this section shall be applied against the tax otherwise due under N.J.S.54A:1-1 et seq., after all other credits and payments. If the credit exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7; provided however, that subsection (f) of N.J.S.54A:9-7 shall not apply. The credit provided under this section as a credit against the tax otherwise due and the amount of the credit treated as an overpayment shall be treated as a credit towards or overpayment of gross income tax, subject to all provisions of N.J.S.54A:1-1 et seq., except as may be otherwise specifically provided in P.L.2000, c.80 (C.54A:4-6 et al.).
d. The Director of the Division of Taxation in the Department of the Treasury shall establish a program for the distribution of earned income tax credits pursuant to the provisions of this section.
e. Any earned income tax credit pursuant to this section shall not be taken into account as income or receipts 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.
(cf: P.L.2021, c.130, s.1)
2. This act shall take effect immediately.
STATEMENT
This bill increases the benefit amounts under the New Jersey earned income tax credit (NJEITC) program and expands eligibility for taxpayers with Individual Taxpayer Identification Numbers (ITIN) and those taxpayers who have been victims of domestic abuse
Currently, the program provides a tax credit equal to 40 percent of the federal earned income tax credit. The bill increases this amount from 40 percent to 45 percent over a five-year period.
This bill allows taxpayers with ITINs to qualify for the NJEITC program. Under the federal earned income tax credit program, a taxpayer, including a spouse if filing a joint return, is required to have a Social Security number issued by the federal Social Security Administration in order to qualify. Eligibility for the NJEITC program is generally linked to the federal earned income tax credit program; thus, an individual taxpayer who has an ITIN does not qualify for either the federal or State programs. The bill modifies the eligibility criteria under the NJEITC program to allow taxpayers with ITINs to qualify for the tax credit.
The bill also expands eligibility under the NJEITC program for taxpayers who are victims of domestic abuse. Under the federal program, if a taxpayer is married, the taxpayer is required to file a joint return with their spouse to be eligible for the federal earned income credit. However, victims of domestic abuse typically file as married filing separately, losing their federal earned income credit and NJEITC program eligibility in the process.
The bill exempts a married taxpayer from the joint filing requirement if the taxpayer files as married filing separately and the taxpayer: (i) was living apart from the taxpayer's spouse on the last day of the taxable year for which the credit is claimed; (ii) was a victim of domestic abuse, as defined by the bill, within the past three years; and (iii) indicates on the taxpayer's gross income tax return that the taxpayer meets the criteria set forth in the bill.
