NJ Moves to Fix its Error on New Child Tax Credit
TRENTON – A bill fixing a mistake lawmakers made in June reached Gov. Phil Murphy’s desk Monday, making the state’s new child tax credit available when people file their taxes next year, rather than waiting until 2024.
The new child tax credit was one of the ballyhooed inclusions in the 2023 state budget, but the law establishing it was written to start in tax year 2023 – meaning, on the income tax returns people file in 2024.
That’s not what Murphy or lawmakers had in mind. But when Republicans noted the drafting error before the bill passed, Democrats pushed it through to approval without changing it.
“It was always our intention to have this tax credit. We passed this virtually unanimously, in bipartisan support,” said Assemblyman Roy Freiman, D-Somerset, at the committee hearing where the fix was heard last week.
“The faster we can accelerate this, the faster we can bring this child tax credit to the residents, the better everyone is going to be,” he said.
The bill correcting the law was passed 29-6 last Thursday by the Senate, which fast-tracked the legislation to a final vote without a committee hearing.
The Assembly held the customary committee hearing on the bill, though did so through an unusual forum: the Assembly Oversight, Reform and Federal Relations Committee.
The full Assembly approved the new bill Monday in a 67-4 vote.
At the committee hearing, Freiman noted that raising a child is expensive and said it doesn’t get cheaper as they get older. However, the new child tax credit applies only for children under the age of 6 years.
Credits are available to taxpayers with taxable income of $80,000 or less, with the amount of the credit varying:
- Taxpayers with income not over $30,000 receive a credit of $500.
- Taxpayers with income between $30,001 and $40,000 receive a credit of $400.
- Taxpayers with income between $40,001 and $50,000 receive a credit of $300.
- Taxpayers with income between $50,001 and $60,000 receive a credit of $200.
- And taxpayers with income between $60,001 and $80,000 receive a credit of $100.
The credit is refundable, meaning taxpayers whose tax bills are less than the amount of their credit receive the balance in the form of a refund.
Taxpayers will be allowed to claim the credit whether they file with a Social Security number or an Individual Taxpayer Identification Number on their tax forms. The latter category is generally, though not exclusively, what immigrants who aren’t legal residents use to pay their income taxes.
Nonpartisan legislative analysts project that the new tax credit will be paid for 374,000 dependent children, reducing state revenues by $134.7 million to $156.3 million.