[Second Reprint]

SENATE, No. 4065

STATE OF NEW JERSEY

219th LEGISLATURE

 

INTRODUCED NOVEMBER 8, 2021

 


 

Sponsored by:

Senator  DAWN MARIE ADDIEGO

District 8 (Atlantic, Burlington and Camden)

Senator  TROY SINGLETON

District 7 (Burlington)

Assemblywoman  GABRIELA M. MOSQUERA

District 4 (Camden and Gloucester)

Assemblyman  ROY FREIMAN

District 16 (Hunterdon, Mercer, Middlesex and Somerset)

Assemblywoman  LISA SWAIN

District 38 (Bergen and Passaic)

Assemblywoman  BRITNEE N. TIMBERLAKE

District 34 (Essex and Passaic)

 

Co-Sponsored by:

Senator Turner, Assemblymen Benson, Calabrese, Assemblywomen McKnight, Murphy, Vainieri Huttle, Jimenez, Speight, Assemblymen Tully, Mejia, Stanley and Wimberly

 

 

 

 

SYNOPSIS

     Revises gross income tax credit for child and dependent care expenses.

 

CURRENT VERSION OF TEXT

     As amended by the General Assembly on December 2, 2021.

  


An Act concerning the gross income tax credit for child and dependent care expenses 2[1[,] and1] ,2 amending 2[1and supplementing1]2 P.L.2018, c.45.

 

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

 

     1[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 [$60,000] $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 $20,000                                         50% of federal credit

over $20,000 but not over $30,000               40% of federal credit

over $30,000 but not over $40,000               30% of federal credit

over $40,000 but not over $50,000               20% of federal credit

over $50,000 but not over $60,000               10% of federal credit.]

 

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.

 

[The credit allowed by this section for a taxable year shall not exceed $500 for employment-related expenses paid by the taxpayer for one qualifying individual and $1,000 for employment-related expenses paid by the taxpayer for two or more qualifying individuals.]  The [$60,000] $150,000 income limit set forth in this subsection shall apply to taxpayers of any filing status.

     b.    [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.] 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.  The Director of the Division of Taxation shall determine the order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law.

     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.2018, c.45, s.5)]1

 

     11.   Section 5 of P.L.2018, c.45 (C.54A:4-17) is amended to read as follows:

     5.    a.  2[[A] For taxable years beginning on or after January 1, 2018 but before January 1, 2021, and for taxable years beginning on or after January 1, 2022, a] A2 resident taxpayer with New Jersey taxable income of 2[$60,000] $150,0002 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:

2[Not over $20,000                                       50% of federal credit

over $20,000 but not over $30,000               40% of federal credit

over $30,000 but not over $40,000               30% of federal credit

over $40,000 but not over $50,000              20% of federal credit

over $50,000 but not over $60,000              10% of federal credit.]

 

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.2

2[The credit allowed by this section for a taxable year shall not exceed $500 for employment-related expenses paid by the taxpayer for one qualifying individual and $1,000 for employment-related expenses paid by the taxpayer for two or more qualifying individuals.]2 The 2[$60,000] $150,0002 income limit set forth in this subsection shall apply to taxpayers of any filing status.

     b.    2[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.] 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.2

     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.1

(cf: P.L.2018, c.45, s.5)

 

     2[12.  (New section) a.  For the taxable year beginning on January 1, 2021, 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.

 

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.  The Director of the Division of Taxation shall determine the order of priority of the application of the credit allowed pursuant to this section and any other credits allowed by law.

     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.1]2

 

     22.   This act shall take effect immediately and shall apply retroactively to taxable years beginning on and after January 1, 2021.2

 

     1[2.] 2[3.1  This act shall take effect immediately 1[and shall apply retroactively to taxable years beginning on and after January 1, 2021]1.]2