NJ child tax credit: What families would get back under plan – Asbury Park Press

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, though some Republican lawmakers are skeptical about the financial benefit.

The proposal, which was fast-tracked 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. 

“It helps New Jerseyans live in place and work to raise a family,” one of the bill’s main sponsors, Assemblywoman Verlina Reynolds-Jackson, D-Mercer, said before a vote on the bill. “The child tax credit directly provides assistance to families without the necessity of submitting additional applications.”

Republicans panned the bill for not offering the tax credit for children over the age of 6, and the timeline for when families would see the benefits.

Assemblyman Hal Wirths, R-Sussex, suggested before the Assembly floor vote that the refunds wouldn’t go out until 2024 because it’s worded to apply to “taxable years beginning on and after January 1, 2023” ― meaning the refunds would come in during the 2024 tax season.

“This is not immediate by any definition,” Wirths said.

The proposal passed 31-6 in the Senate and 76-2 in the Assembly on Wednesday afternoon and was sent to Gov. Phil Murphy’s desk to be signed.

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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.

A March study by Rutgers University found that nearly half of eligible New Jerseyans did not take advantage of the federal tax credit because they did not know about the credit or that they were eligible.

“Low utilization was due to the fact that many low-income households are not required to file their taxes, so the [Internal Revenue Service] cannot flag them to be sent a check,” Sarah Small, a co-author of the Rutgers study, said in an email Monday.”Others may be unbanked or may have moved since last filing their taxes, so even if they were eligible to receive the federal CTC advanced payments, they may not have actually seen the money until filing their 2021 returns.”

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. The Rutgers study 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,” Small said in an email Monday.

The 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. 

Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record. Email: munozd@northjersey.comTwitter: @danielmunoz100