No 4th stimulus check, but N.J.’s $500 tax rebates are coming. Here’s all you need to know. – NJ.com

The state Legislature is voting this week on a $46.4 billion state budget that will pave the way for tax rebates of up to $500 for more than 760,000 households in New Jersey.

The money could come as soon as next month.

“This is direct tax relief to middle income families and senior citizens who need it most,” state Senate President Stephen Sweeney, D-Gloucester, said in a statement. “The income tax rebate will put money into the pockets of working families so they can support themselves and their children.”

As part of the budget, the state will also expand a tax break on retirement distributions, increase Homestead property tax credits and create new tax deductions for college savings contributions and tuition and loan payments.

While the income tax rebates will be funded out of next year’s budget, they’re the result of negotiations last fall. The rebate proposal broke a years-long impasse between Gov. Phil Murphy and the Senate president over Murphy’s calls to raise taxes on high-income earners. The agreement, announced in September, came amid the fallout from the pandemic. Officials said the deal would help both the state and its residents during the health and economic crises.

Here’s everything you need to know:

1. Who is eligible to receive a tax rebate?

Married couples in New Jersey with income below $150,000 and at least one dependent child would qualify for a rebate check. Individuals with less than $75,000 in income and at least one dependent child qualify.

2. Do you really need a dependent child to qualify?

Yes.

3. Eligibility for the federal stimulus payments was based on adjusted gross income. Will these rebates be, too?

The benefit is based on 2020 gross income, which is your income before taxes and deductions.

4. Are non-residents eligible?

No. Only New Jersey residents would be eligible for the rebate.

5. How many households will qualify?

The administration estimated 764,000 New Jersey households will qualify for a rebate.

6. How much money will you receive?

The maximum rebate is $500.

Unlike the federal stimulus payments, there is no sliding scale based on income here. However, it is a non-refundable tax rebate, which means your state income tax liability has to be at least $500 to receive the full $500 rebate. If your state income tax liability is only $300, you will receive a $300 rebate. If it is $100, you’ll receive a $100 rebate.

“The rebate is the lesser of $500 or an amount equal to the amount of tax after credits on the 2020 gross income tax return,” the Treasury Department said.

The more than 716,000 eligible couples filing jointly would receive an average of $425, while the nearly 48,000 single filers would receive an average of $297, according to the Department of Treasury.

7. What if you have more than one dependent child?

Also unlike the federal stimulus payments, this rebate does not take into account how many dependent children you have.

8. Do you have to apply for the rebates?

No. If you filed a 2020 return, it will automatically be sent to you if you qualify. The state will be send paper checks, not direct deposit.

9. When do the checks go out?

The state Treasury Department could begin to issue rebates in early July, a spokeswoman said.

10. Can the rebate be garnished for back taxes or child support?

It will be subject to the Set-Off of Individual Liability, which withholds tax refunds or benefits from anyone who owes federal taxes, child support, traffic fines, or other debts, the Treasury Department said.

11. How much does the rebate program cost?

Treasury officials put the rebates’ price tag at $319 million.

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Samantha Marcus may be reached at smarcus@njadvancemedia.com.