LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 4028
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JUNE 29, 2023
SUMMARY
Synopsis: Expands eligibility for State gross income tax credit for child and
dependent care expenses and increases amount of credit.
Type of Impact: Annual State revenue loss to the Property Tax Relief Fund.
Agencies Affected: Department of the Treasury.
Office of Legislative Services Estimate
Fiscal Impact Fiscal Year 2025 and Annually Thereafter
State Revenue Loss Increase $16.0 million to $17.7 million
 The Office of Legislative Services (OLS) estimates that this bill will result in total State losses
of between $43.3 million and $45.0 million, which would represent additional State revenue
losses of between $16.0 million and $17.7 million annually when compared to the most recent
Executive Branch estimates of tax expenditures for the child and dependent care expense tax
credit.
BILL DESCRIPTION
This bill revises the State’s child and dependent care tax credit, which is based on the federal
credit and is for taxpayers who incur expenses for household services and the care of a child or
dependent to enable the taxpayer to be employed. The bill: (1) expands eligibility for the State
child and dependent care credit against the New Jersey gross income; and (2) increases the amount
of the credit. The bill expands qualifying income brackets for taxpayers who are married filing
jointly or filing as a head of household or as a surviving spouse for federal income tax purposes,
and raises the $150,000 income eligibility limit to $250,000 for these taxpayers. Under the bill,
the income limit would remain at $150,000 for all other filing statuses but the amount of the New
Jersey credit available to taxpayers would be increased. The changes are summarized in the table
below:
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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Married Individuals Filing Separately and Unmarried Individuals
Current Law Bill
Not over $30,000 (50 percent of federal credit) Not over $30,000 (60 percent of federal credit)
Over $30,000 but not over $60,000 (40 percent Over $30,000 but not over $60,000 (50 percent
of federal credit) of federal credit)
Over $60,000 but not over $90,000 (30 percent Over $60,000 but not over $90,000 (40 percent
of federal credit) of federal credit)
Over $90,000 but not over $120,000 (20 Over $90,000 but not over $120,000 (30
percent of credit) percent of credit)
Over $120,000 but not over $150,000 (10 Over $120,000 but not over $150,000 (20
percent of federal credit) percent of federal credit)
Married Couple Filing Jointly, Head of Household, and Surviving Spouse
Current Law Bill
Not over $30,000 (50 percent of federal credit) Not over $50,000 (60 percent of federal credit)
Over $30,000 but not over $60,000 (40 percent Over $50,000 but not over $100,000 (50
of federal credit) percent of federal credit)
Over $60,000 but not over $90,000 (30 percent Over $100,000 but not over $150,000 (40
of federal credit) percent of federal credit)
Over $90,000 but not over $120,000 (20 Over $150,000 but not over $200,000 (30
percent of credit) percent of federal credit)
Over $120,000 but not over $150,000 (10 Over $200,000 but not over $250,000 (20
percent of federal credit) percent of federal credit)
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that this bill will result in total State revenue losses of between $43.3
million and $45.0 million, which would represent additional State revenue losses of between $16.0
million and $17.7 million annually when compared to the most recent estimates of tax expenditures
for the child and dependent care expense tax credit. The OLS does not have access to State-level
child and dependent care tax credit data. Instead, the office relies on publicly available federal
child and dependent care tax credit information from the Internal Revenue Service’s (IRS)
Statistics of Income from Tax Years 2018 to 2020.
The OLS also notes that, while the federal tax data includes a breakdown of the number of
filers utilizing the federal credit by certain income ranges, the data do not include a breakdown by
filing status. For the purposes of this estimate, the OLS assumes that 70 percent of filers are
married couple filing jointly, heads of households, or surviving spouses and 30 percent of filers
are married individuals filing separately and unmarried individuals. This assumption is based on
a 2017 Congressional Research Service report indicating that over seven out of 10 federal child
and dependent care tax credit filers are married couple families where both parents worked, with
the remaining being single parents who worked.
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Expanding the eligible population for the State child and dependent care tax credit to married
households, heads of households, and surviving spouses that make up to $250,000, and increasing
the percentage of the federal credit for married individuals filing separately and other unmarried
individuals, is estimated to cost a total of between $43.3 million and $45.0 million. This estimate
would represent additional State revenue losses of between $16.0 million and $17.7 million when
compared to the most recent Executive Branch estimates of tax expenditures for the child and
dependent care expense tax credit. The FY 2024 Tax Expenditure Report currently lists the
revenue loss stemming from the child and dependent care tax credit at $27.3 million in each FY
2023 and FY 2024.
Section: Revenue, Finance and Appropriations
Analyst: Christopher Myles
Senior 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.).


Statutes affected:
Introduced: 54A:4-17