Assembly Democratic sponsored legislation that would allow gross income tax credit for certain child and dependent care expenses was approved by an Assembly panel on Monday. The bill is part of efforts by Assembly Democrats to lift people out of poverty and rebuild New Jersey’s middle-class.
The legislation is sponsored by Assembly members Troy Singleton, L. Grace Spencer, Ralph Caputo, Adam Taliaferro and Marlene Caride. The purpose of the bill is to assist working taxpayers that incur expenses for child or dependent care services, which are often substantial.
“Child care expenses can exceed the amount of a mortgage or car lease payment in some cases,” said Singleton (D-Burlington). "This is not an abstract struggle. It touches the lives of the vast majority of Americans, especially single-parent households where child care is not a luxury but an absolute necessity."
“Child care is a major expense for many families,” said Spencer (D-Essex). “It is also necessary for many working families, especially single mothers. When a quarter of your income is designated for child care to enable you to work and provide for your children, it is only right that you are able to claim that on your state taxes.”
In 2013, the Advocates for Children of New Jersey released a report, “Meeting the Child Care Challenge: A Kids Count Special Report,” that found working families in New Jersey are spending about one-quarter of their income on child care. The same report also found for a low-income family of four earning $46,100, they are paying an average of 44% of their income on child care and a single parent is paying 73% of their paycheck. Child care costs are exceeding $10,000 annually for many families and this tax credit, which has been implemented by 24 states across the nation in some form, is providing relief to these struggling families.
“The cost of childcare is rising. It is even higher for families with more than one young child in need of childcare,” said Caputo (D-Essex). “This is pro- working family legislation that will help many New families working hard to make ends meet.”
“Child care costs can exceed in-state tuition at some of New Jersey’s colleges or nearly equal the amount of one year at a community college,” said Taliaferro (D-Cumberland, Gloucester, Salem). “It is that expensive. Taxpayers should be able to receive a credit for the child care they needed in order for them to go to work and make a living for their families.”
“The average family spends nearly $1000 a month for child care,” said Caride (D-Bergen, Passaic). “This is an exorbitant, but critical, expense to working parents who sometime must work more than one job to provide for their children. This credit allows parents to decrease their income taxes and increase income available for their families.”
This bill (A-331) provides a nonrefundable credit against the New Jersey gross income tax for certain expenses paid for the care of a child or dependent when necessary for the taxpayer’s employment. The credit is available to taxpayers who are allowed the federal child and dependent care credit and have a New Jersey taxable income of $60,000 or less for the taxable year.
The amount of the credit provided by this bill is a specific percentage of the taxpayer’s federal child and dependent care credit and varies according to the amount of taxpayer’s New Jersey taxable income.
The credit is capped at a maximum of $500 for expenses paid for one qualifying individual, and $1000 for expenses for expenses paid for two or more qualifying individual, per taxable year. Married couples must file jointly in order to claim the credit.
The bill was approved by the Assembly Human Services Committee.