2021 New Jersey Revised Statutes
Title 54A - New Jersey Gross Income Tax Act
Section 54A:4-6 - Findings, declarations relative to an earned income tax credit

54A:4-6. Findings, declarations relative to an earned income tax credit

1. The Legislature finds and declares that:

a. Since its enactment in 1975, the federal earned income tax credit has received bipartisan support and has proven to be one of the nation's most effective anti-poverty programs for working families by encouraging work, supplementing earnings and lifting nearly five million people out of poverty each year, approximately half of them children;

b. The federal earned income tax credit has contributed to a significant increase in labor force participation among New Jersey families;

c. A New Jersey Earned Income Tax Credit will build upon the federal program by cutting taxes for families struggling to provide for their children, reducing child poverty, supporting welfare-to-work efforts and making New Jersey a better place to live, work and raise a family;

d. Over the last six years, New Jersey's unemployment rate has fallen to its lowest rate in nearly a decade, and a significant number of the State's families who were dependent on welfare have made the transition from public assistance to work, often beginning in low-wage or entry-level positions; and

e. A New Jersey Earned Income Tax Credit can further promote work and job retention by supplementing the incomes of nearly 280,000 low-income working families as they move up the career ladder and remain independent from public assistance.

L.2000,c.80,s.1.

54A:4-7 New Jersey Earned Income Tax Credit program.

2. There is established the New Jersey Earned Income Tax Credit program in the Division of Taxation in the Department of the Treasury.

a. (1) A resident individual who is eligible for a credit under section 32 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.32) shall be allowed a credit for the taxable year equal to a percentage, as provided in paragraph (2) of this subsection, of the federal earned income tax credit that would be allowed to the individual or the married individuals filing a joint return under section 32 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.32) for the same taxable year for which a credit is claimed pursuant to this section, subject to the restrictions of this subsection and subsections b., c., d. and e. of this section and the modifications of paragraph (4) of this subsection.

(2) For the purposes of the calculation of the New Jersey earned income tax credit, the percentage of the federal earned income tax credit referred to in paragraph (1) of this subsection shall be:

(a) 10% for the taxable year beginning on or after January 1, 2000, but before January 1, 2001;

(b) 15% for the taxable year beginning on or after January 1, 2001, but before January 1, 2002;

(c) 17.5% for the taxable year beginning on or after January 1, 2002, but before January 1, 2003;

(d) 20% for taxable years beginning on or after January 1, 2003, but before January 1, 2008;

(e) 22.5% for taxable years beginning on or after January 1, 2008 but before January 1, 2009;

(f) 25% for taxable years beginning on or after January 1, 2009 but before January 1, 2010;

(g) 20% for taxable years beginning on or after January 1, 2010, but before January 1, 2015;

(h) 30% for taxable years beginning on or after January 1, 2015, but before January 1, 2016;

(i) 35% for taxable years beginning on or after January 1, 2016, but before January 1, 2018;

(j) 37% for the taxable year beginning on or after January 1, 2018, but before January 1, 2019;

(k) 39% for the taxable year beginning on or after January 1, 2019, but before January 1, 2020; and

(l) 40% for taxable years beginning on or after January 1, 2020.

(3) To qualify for the New Jersey earned income tax credit, if the claimant is married, except for a claimant who files as a head of household or surviving spouse for federal income tax purposes for the taxable year, the claimant shall file a joint return or claim for the credit.

(4) A resident individual who is at least 18 years of age or older, but cannot claim a qualifying child as defined under section 152 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.152) for the federal earned income tax credit, shall be eligible for the New Jersey earned income tax credit if that resident individual is ineligible to claim the federal earned income tax credit due to age requirements. The resident individual shall meet all qualifications, except for the minimum or maximum age, for the federal earned income tax credit in order to be eligible for the New Jersey earned income tax credit. Calculation of the New Jersey earned income tax credit available to individuals pursuant to this paragraph shall be predicated on the federal maximum amount for taxpayers with no qualifying child for each taxable year beginning on and after January 1, 2020.

b. In the case of a part-year resident claimant, the amount of the credit allowed pursuant to this section shall be pro-rated, based upon that proportion which the total number of months of the claimant's residency in the taxable year bears to 12 in that period. For this purpose, 15 days or more shall constitute a month.

c. The amount of the credit allowed pursuant to this section shall be applied against the tax otherwise due under N.J.S.54A:1-1 et seq., after all other credits and payments. If the credit exceeds the amount of tax otherwise due, that amount of excess shall be an overpayment for the purposes of N.J.S.54A:9-7; provided however, that subsection (f) of N.J.S.54A:9-7 shall not apply. The credit provided under this section as a credit against the tax otherwise due and the amount of the credit treated as an overpayment shall be treated as a credit towards or overpayment of gross income tax, subject to all provisions of N.J.S.54A:1-1 et seq., except as may be otherwise specifically provided in P.L.2000, c.80 (C.54A:4-6 et al.).

d. The Director of the Division of Taxation in the Department of the Treasury shall establish a program for the distribution of earned income tax credits pursuant to the provisions of this section.

e. Any earned income tax credit pursuant to this section shall not be taken into account as income or receipts for purposes of determining the eligibility of an individual for benefits or assistance or the amount or extent of benefits or assistance under any State program and, to the extent permitted by federal law, under any State program financed in whole or in part with federal funds.

L.2000, c.80, s.2; amended 2007, c.109; 2010, c.27; 2015, c.73; 2016, c.57, s.11; 2018, c.45, s.4; 2020, c.98; 2021, c.130.