LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 172

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: SEPTEMBER 16, 2025

 

 

SUMMARY

 

Synopsis:

Provides paid leave for employee to attend certain events of child of employee; establishes tax credits for employer that provide those leave benefits.

Type of Impact:

Annual State revenue loss.

Agencies Affected:

Department of the Treasury; Department of Labor and Workforce Development.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Annual

State Revenue Loss

Up to $10 million

 

 

·         The Office of Legislative Services (OLS) estimates that the bill will result in an annual State revenue loss of up to $10 million to provide tax credits to employers that offer paid leave for employees to attend school-related events of their children.

 

·         The actual annual revenue loss that may result from the bill is indeterminate and could be less than the $10 million maximum, with revenue losses depending on employer participation rates.  The OLS is unable to determine the precise fiscal impact due to uncertainty regarding the number of employers that will participate in the program and the extent to which they will utilize the available tax credits.

 

 

BILL DESCRIPTION

 

      The bill establishes a tax credit program in the Department of Labor and Workforce Development to provide credits to employers that offer full paid leave for up to two working days annually for employees to attend school-related conferences, meetings, functions, or other events of their children.

      Employers may apply for tax credits equal to the amount of wages actually paid to employees for the paid leave benefit.  The credits may be applied against either corporation business tax or gross income tax liability, whichever is applicable to the employer.  Employers may qualify for credits beginning in taxable years or privilege periods starting on or after January 1, 2025.

      The bill caps the combined value of all tax credits approved annually at $10 million.  The Department of Labor and Workforce Development is required to review this cap annually and report to the Legislature on its sufficiency.  The tax credits cannot be carried forward to subsequent years and cannot reduce tax liability below statutory minimums.

      The bill requires the department to adopt regulations establishing standards for employer eligibility, record-keeping requirements, and procedures for submitting certificates of credit to the Division of Taxation.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concludes that this bill will result in an annual State revenue loss of up to $10 million, as established by the statutory cap in the bill, associated with the provision of tax credits to employers that offer paid leave for employees to attend school-related events of their children. 

      The actual annual revenue loss that may result from the bill is indeterminate and could be less than the $10 million maximum.  The actual revenue loss will depend on employer participation rates; participation would be voluntary and influenced by various business considerations including the cost of providing the paid leave benefit relative to the value of the tax credit received.  The number of employees per participating employer who will utilize the paid leave benefit and the wage levels of those employees will also affect the total credit amounts claimed.  The OLS is unable to quantify the precise revenue loss due to uncertainty regarding these participation and utilization factors.

      The bill allows employers to qualify for tax credits beginning in taxable years or privilege periods starting on or after January 1, 2025.  Initial revenue impacts may be limited in the first year as employers become aware of the program.  The State’s revenue loss is expected to increase in subsequent years as program awareness and participation grow.   

      The OLS notes there would be an indeterminate workload increase for the Department of Labor and Workforce Development to establish and administer the tax credit program.

 

 

Section:

Revenue, Finance, and Appropriations

Analyst:

Patrick Walsh

Associate Fiscal 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.).