NJ child tax credit: What families would get back under plan – NorthJersey.com

Lawmakers are looking to spend millions of state dollars to lessen the burden of rising child care costs on New Jersey’s lowest-earning families.

The proposal, which is on the fast track in Trenton amid a chaotic budget season, would create the New Jersey Child Tax Credit Program and give a refundable tax credit of up to $500 per year for each child under the age of 6 for families earning up to $30,000 a year. 

After that, the credits would decrease by $10 for every $1,000 of yearly family income above $30,000, until reaching a minimum of $300 per child for a household earning up to $80,000, according to the legislation. 

“For parents earning less than $30,000, a $500 payment can be a critical difference between making rent or being evicted. We cannot allow hard-working families with young children to remain left behind,” reads a May statement from one of the bill’s sponsors, Assemblywoman Verlina Reynolds-Jackson, D-Mercer.

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For some New Jersey families, it would effectively replace a federal child tax credit from the White House’s coronavirus relief package passed in 2021, which provided up to $3,000 to families in a lump sum or advanced monthly payments, but has since expired.

These tax refunds would be automatic depending on eligibility, Reynolds-Jackson said, unlike the federal expanded child tax credit, in which claimants had to take extra steps to receive the aid.

“The proposed state child tax credit will be available to all families who are eligible and want to take advantage of it,” Reynolds-Jackson said in a Tuesday email. 

The proposed Assembly bill 3852 was approved in both the Senate and Assembly budget committees on Monday, part of a marathon voting session for a $50 billion state budget proposal, which needs to be approved by Gov. Phil Murphy by the end of Thursday. Sen. Teresa Ruiz, D-Essex, is sponsoring the Senate version of the bill. 

Both versions are up for a full floor vote in the Assembly and Senate on Thursday, the penultimate day before lawmakers break for summer recess. 

It would have an annual price tag of $134.7 million to $156.3 million, according to a state fiscal analysis released Monday. At least 180,700 children under the age of 6 would be eligible for the full $500 and at least 99,500 could get a credit of at least $300, the analysis added. 

“This program will provide working families a critical lifeline for basic needs like food, housing, child care, and more,” Nicole Rodriguez, president of the progressive think tank New Jersey Policy Perspective, said in a statement. 

“We are under no illusion that this credit alone will end child poverty, but this commitment will go a long way for the working- and middle-class families who qualify,” Rodriguez said.

In 2020, the cost of child care rose past $10,000, according to a report this year from the nonprofit group ChildCare Aware of America. A Rutgers University study from March found that many families used the federal tax credit for utilities, clothing and food, in order to handle the costs of child care. 

“As child care costs in New Jersey continue to burden families, the New Jersey Child Tax Credit has the potential to be especially helpful for parents with young children,” Sarah Small, a co-author of the Rutgers study, said in an email Monday. 

Their report relied on a U.S Census Bureau survey of working parents. Census figures cited in the study showed that families earning less than $50,000 a year were more likely to tap the credit to pay off debt, while higher-income families were more likely to save or invest it.

“Because the proposed New Jersey Child Tax Credit is only applicable to households earning less than $80,000 annually, we are hopeful that dissemination among low-income families will be better targeted than the national advanced [child tax credit] payments,” Small said in an email. 

Over 14% of New Jersey children under the age of 5 lived in poverty, according to state Health Department figures. That number jumped to nearly 25% of Black children and nearly 23% of Hispanic children, compared with just 11.4% of white children.