ASSEMBLY, No. 533

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Assemblywomen CRECCO and FARRAGHER

An Act providing a gross income tax credit for child and dependent care expenses, 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 taxpayer who is entitled to claim a credit for child and dependent care expenses on the taxpayer's federal individual income tax return pursuant to section 21 of the federal Internal Revenue Code of 1986 (26 U.S.C.§21), shall be entitled to a credit for child and dependent care expenses against the State tax otherwise due under N.J.S.54A:4-1 et seq. The credit allowed under this section shall be an amount equal to 20% of the maximum credit allowed for federal tax purposes.

    2. The Director of the Division of Taxation in the Department of the Treasury shall adopt, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations necessary to effectuate the provisions of this act.

    3. This act shall take effect immediately and apply to taxable years beginning on or after January 1 next following enactment.

STATEMENT

    To assist working parents afford quality child care, this bill provides a taxpayer who qualifies to claim a child and dependent care expense credit on the taxpayer's federal individual tax return with a similar credit against New Jersey gross income tax, in an amount equal to 20% of the federal credit.

    For a taxpayer with an eligible child or dependent, the maximum value of the credit would range from $96 to $144. For a taxpayer with more than one eligible child or dependent, the maximum value would range between $192 and $288. When combined with the federal credit, a taxpayer with a single child or dependent could receive a total credit equal to more than one-third of the first $2,400 spent on child care.

Permits a child and dependent care credit against gross income tax.