New NJ tax credit pays up to $500 per child … but maybe in 2024
TRENTON – New Jersey has created a new child tax credit, which will provide up to $500 a year to families for each young child and is refundable so that low-income families get cash if the benefit exceeds their tax bills.
When anyone will see it is a bit of an open question, though, as the new law was amended before being approved in a way that delays any payments until 2024.
Gov. Phil Murphy and legislative leaders say they’ll fix that though didn’t say when or how. They also didn’t address why they ignored Republican lawmakers who pointed out the apparent error before the bill was approved.
In a prepared statement issued one day after the budget was signed, at around 7 p.m. on the Friday leading into Fourth of July weekend, Murphy, Senate President Nick Scutari, Assembly Speaker Craig Coughlin, Senate Majority Leader Teresa Ruiz and Assemblywoman Verlina Reynolds-Jackson said:
“Our working families need the relief of the state child tax credit and it has been our full intention to give it to them as they file their 2022 tax returns. We are committed together to clarify this in law.”
As originally introduced, the bill would have taken effect immediately and applied retroactively to the start of this year. It was amended in committee to take effect starting with tax years that begin Jan. 1, 2023 – which means people can claim it when filing 2023 tax returns in the spring of 2024.
Assemblyman Hal Wirths, R-Sussex, told the Assembly before the vote that’s not immediate relief by any definition.
“If this body is serious about tax relief – which I don’t think it is, the majority – but if we’re serious about it, how can we have a bill that’s not going to do anything until the year 2024?” Wirths said.
The child tax credit, S2523/A3852, was approved by votes of 31-6 in the Senate and 76-2 in the Assembly.
The tax credit is $500 per child under age 6 in homes with incomes under $30,000. It shrinks as a family’s income increases: $400 if income is $30,000 to $40,000; $300 if income is $40,000 to $50,000; $200 if income is $50,000 to $60,000; and $100 if income is $60,000 to $80,000.
The nonpartisan Office of Legislative Services forecasts it will be claimed for 374,000 children under age 6 in its first year, including 180,700 at $500 maximum and 99,500 others for at least $300 each.
It is expected to reduce state revenues by $134.7 million to $156.3 million a year.
The credit will be paid to people who file income taxes using either a Social Security number or Individual Taxpayer Identification Number. The latter is often though not exclusively used by unauthorized immigrants.
Reynolds-Jackson, D-Mercer, the lead Assembly sponsor, said the tax credit promotes strong child development and reduces child poverty and food insecurity.
“The child tax credit directly provides cash assistance to families without the necessity of submitting additional applications and meeting requirements,” Reynolds Jackson said.
Assemblywoman Aura Dunn, R-Morris, said it was an important first step but ultimately falls short. She said it should include older children and provide larger credits.
“While this bill provides credits only to families with children under the age of 6, we know: Bigger kids, bigger expenses,” Dunn said.