EARNED INCOME TAX CREDIT (EITC)

Rate (Fully-Refundable): 40% as of September 2020

Eligibility Requirements: All New Jersey taxpayers who qualify for the federal credit are automatically eligible and workers between the ages of 21 and 25.

Latest Legislative Action:

• In September 2020, New Jersey enacted a state budget for Fiscal Year 2021 that lowered the age of eligibility for the state EITC from 25 to 21.

Notes:

• In July 2018, New Jersey enacted a state budget for Fiscal Year 2019 that included an expansion of the state’s EITC from 35 to 40 percent of the federal credit, phased in over 3 years.
• In October 2016, a gas tax increase to fund New Jersey’s Transportation Trust Fund was coupled with an increase to the state’s EITC from 30 to 35 percent of the federal credit.
• During his first year in office in 2010, Gov. Christie’s administration successfully pushed for a reduction in the state EITC from 25% to 20% of the federal credit. The governor line-item vetoed a 2011 budget that would have restored the state EITC to 25%, but pledged to reverse course in his 2012 State of the State address.
• In 2012, 2013, and 2014, Gov. Christie again vetoed budget deals which would have restored the EITC because they did not satisfy all of his desired tax and minimum wage proposals.
• In July of 2015, Gov. Chris Christie surprised many by going beyond a proposed increase in the state’s EITC to 25% of the federal credit and requesting a greater expansion to 30% in the final budget package later signed into law.

CHILD TAX CREDIT (CTC)

Rate (Fully-Refundable): 50% of the federal rate.

Eligibility Requirements:

• Eligible filers who earn $80,000 or less. (See New Jersey’s income tax information page for details)
• All qualifying children must be under the age of six.
• Eligible filers who file with a social security number or an Individual Taxpayer Identification Number (ITIN).

Latest Legislation Action: In 2023, lawmakers expanded the state CTC from $500 to $1000 per eligible child. This expansion comes a year after the tax credits enactment.¹

Notes:

• In 2022, Gov. Phil Murphy signed S2523, creating a state CTC valued at $500 per eligible child and available to qualifying taxpayers who file with a social security number or ITIN. 

CHILD AND DEPENDENT CARE TAX CREDIT (CDCTC)

Rate: 50% of the federal credit for those making up to $20,000 annually; 40 percent for those making between $20,000 and $30,000; 30 percent for those making between $30,000 and $40,000; 20 percent for those making between $40,000 and $50,000; and 10 percent for those making between $50,000 and $60,000. The maximum amount that can be deducted is $500 for one child or dependent, and $1,000 for two or more.

Latest Legislative Action: In July 2018, New Jersey enacted a state budget for Fiscal Year 2019 that included the creation of a state-level Child and Dependent Care Tax Credit for households earning less than $60,000.