LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 2523

STATE OF NEW JERSEY

220th LEGISLATURE

 

DATED: JULY 13, 2022

 

 

SUMMARY

 

Synopsis:

Establishes New Jersey Child Tax Credit Program.

Type of Impact:

Annual State revenue loss to Property Tax Relief Fund starting in FY 2024.

Agencies Affected:

Department of the Treasury.

 

 

Office of Legislative Services Estimate

Fiscal Impact

FY 2024 and Each FY Thereafter

 

Annual State Revenue Loss

$134.6 million to $141.1 million

 

 

 

 

·         The Office of Legislative Services (OLS) estimates that this bill will reduce revenues earmarked for the Property Tax Relief Fund by $134.6 million to $141.1 million annually beginning in FY 2024. 

·         The OLS projects that taxpayers will claim the child tax credit for 372,000 dependent children under the age of six for calendar year 2023 in FY 2024.  Taxpayers are estimated to claim the bill’s maximum credit of $500 per child for 180,000 dependent children.  Another 99,000 dependent children are estimated to yield a credit of at least $300 each.

·         The tax credit is refundable, so taxpayers will be able to claim and utilize the full amount of their tax credit.

 

 

BILL DESCRIPTION

 

      This bill establishes the New Jersey Child Tax Credit program allowing a gross income tax credit for each child of the taxpayer under the age of six years starting for tax year 2023.  The credit is refundable, meaning that any excess credit beyond the taxpayer’s tax liability will be paid to the taxpayer as a tax refund.

      The credit is available to taxpayers who have a New Jersey taxable income of $80,000 or less in accordance with the following schedule: 

 

If the taxable income is:                                              The credit is:

Not over $30,000                                                        $500

over $30,000 but not over $40,000                             $400

over $40,000 but not over $50,000                             $300

over $50,000 but not over $60,000                             $200

over $60,000 but not over $80,000                             $100.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS estimates that this bill will reduce revenues earmarked for the Property Tax Relief Fund by $134.6 million to $141.1 million annually beginning in FY 2024.  Based on Statistics of Income for tax year 2016 New Jersey gross income tax returns, roughly 1.2 million dependent children were claimed by taxpayers with gross income of less than $80,000.  The OLS infers that roughly 385,000 of whom were under the age of six.  After adjusting for a decline in this age cohort since 2016, the OLS estimates that taxpayers will claim the tax credit for 372,000 children for calendar year 2023.  Taxpayers will be able to claim the bill’s maximum credit of $500 per child for an estimated 180,000 dependent children under the age of six.  Another 99,000 dependent children are estimated to yield a credit of at least $300 each.  The OLS notes that the tax credit is refundable, so taxpayers will be able to claim and utilize the full amount of their tax credit.

 

 

Section:

Revenue, Finance, and Appropriations

Analyst:

Jordan DiGiovanni

Revenue Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).