Child care tax credit expansion lands on Murphy’s desk

Senate Bill 4065 was approved by the state Senate in a 35-0 vote on Dec. 2, and a 77-0 vote in the state Assembly. The measure would take effect immediately and apply retroactively to the 2021 tax year.

The lower house session was delayed by several hours when several GOP lawmakers protested a statehouse rule that they produce proof of a COVID-19 vaccine or negative test before being allowed on the  floor. Only seven of the dozens of bills scheduled for consideration in the full Assembly actually received a vote.

Proponents of the measure contend that anything that increases access to child care is vital, especially at a time when lack of access creates a barrier to getting workers – especially women – back into the workforce.

“This bill will help improve access to child care, which will help the industry and an entire workforce that relies on child care,” said Alexis Bailey, who heads government affairs for the New Jersey Business & Industry Association, in a statement.

Gov. Phil Murphy . – EDWIN J. TORRES/GOVERNOR’S OFFICE

The tax credit is geared toward New Jerseyans who pay for child and dependent-care necessary for them to be employed.

With the hiring shortage plaguing businesses as they attempt to recover from the pandemic, and “our participation rate among female workers … at its lowest points in decades,” Bailey continued, “any legislation like this that can increase child care access will help our state.”

She estimated that upwards of 19% of mothers with toddlers and infants left the New Jersey workforce amid the COVID-19 pandemic because of child care issues.

The bill would raise the income limit for the credit from $60,000 under the current law to $150,000. Under the proposed changes, the tax credit would be refundable, meaning a claimant can receive a refund if the credit amount is larger than their tax bill.

The bill would also eliminate the $500 cap for the costs of caring for one child or dependent, and the $1,000 cap for caring for two or more dependents.

“There have been long-standing issues preventing hard-working families from receiving the meaningful support that they deserve,” the bill’s Democratic sponsors said in a Nov. 15 statement.

“Although this is only a one-year change and a small part of addressing New Jersey’s child care crisis, the expanded credit is a critical lifeline for families struggling to care for the state’s youngest children — and a step toward making this a more just and equitable state that treats working people with dignity,” reads a statement from Peter Chen, a senior policy analyst with the progressive think thank New Jersey Policy Perspective.[/vc_column_text][/vc_column][/vc_row]