"Student Loan Debt Relief Tax Credit Act"; establishes gross income tax credit of up to $5,000 for certain student loan payments and makes an appropriation.

A2371

ASSEMBLY, No. 2371

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman WILLIAM F. MOEN, JR.

District 5 (Camden and Gloucester)

SYNOPSIS

���� "Student Loan Debt Relief Tax Credit Act";
establishes gross income tax credit of up to $5,000 for certain student loan
payments and makes an appropriation.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
providing a gross income tax credit for certain student
loan payments, designated as the Student Loan Debt Relief Tax Credit Act,
supplementing Title 54A of the New Jersey Statutes
, and making an
appropriation
.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1. �� a.� As used in this
section:

���� �Authority� means the Higher
Education Student Assistance Authority established pursuant to N.J.S.18:71A-3.

���� �Institution of higher
education� means a public or private university, college, technical college, or
a community or county college.

���� �Qualified taxpayer� means a
taxpayer who has incurred at least $20,000 in student loan debt for attendance
at an institution of higher education and has at least $5,000 in outstanding
student loan debt at the time an application for a tax credit is submitted to
the authority.

���� �Student loan� means a loan
which is (1) secured through a student loan program, a federal student loan
program, or a commercial lender; and (2) obtained and expended exclusively for
the purposes of paying the tuition and fees and other expenses, such as room
and board and books and supplies, related directly to the enrollment of a
qualified taxpayer at an institution of higher education.

���� b.� A qualified taxpayer shall
be allowed a credit against the tax otherwise due for the taxable year pursuant
to the �New Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et seq., in an amount
certified by the authority pursuant to this section.

���� c.� A qualified taxpayer shall
submit an application for a tax credit to the authority in a form and manner
determined by the authority.� The application shall include an assurance from
the qualified taxpayer that any tax credit awarded pursuant to this section
will be used for the repayment of a qualified taxpayer�s student loans in the
two taxable years following the taxable year for which the credit was allowed.�
The application shall include such information as required by the authority to
determine a taxpayer�s eligibility for a credit.

���� d. The authority shall
determine the taxpayer�s eligibility for a tax credit and the amount of the tax
credit, not to exceed $5,000 per taxpayer per taxable year, and shall issue a
certification awarding the tax credit to the taxpayer.� The value of tax credits
approved by the authority pursuant to this section shall not exceed a total of
$10,000,000 in any fiscal year.

���� The authority shall prioritize
applications submitted by qualified taxpayers who:

���� (1) have higher debt to income
ratios;

���� (2) graduated from an
institution of higher education located in this State;

���� (3) did not receive a tax
credit in prior years; or

���� (4) were eligible for the
resident tuition rate at a public institution of higher education or were
exempt from paying out-of-State tuition at a public institution of higher
education.

���� e.� Tax credits shall be
awarded for the taxable year during which the loan payments� are due.� When
filing a tax return that includes a claim for a tax credit allowed pursuant to
this section, the taxpayer shall include a copy of the certification issued by
the authority.� In the case of married individuals filing a separate return,
only one individual shall be permitted to claim the credit allowed pursuant to
this section in a taxable year.�

���� f.� A taxpayer who is not
subject to tax in accordance with N.J.S.54A:2-4 for a taxable year and who is
awarded a tax credit by the authority may claim the credit using an application
made available by the director.� The due date for a tax credit application
submitted pursuant to this subsection shall coincide with the due date for
annual gross income tax returns.

���� g.� If the credit allowed
pursuant to this section, together with any other payments, credits,
deductions, and adjustments allowed by law, reduces a qualified taxpayer�s tax
liability otherwise due under N.J.S.54A:1-1 et seq. to zero, the amount of the
credit remaining shall be paid to the taxpayer as a refund of an overpayment in
accordance with N.J.S.54A:9-7; provided, however, that subsection (f) of that
section, concerning the allowance of interest, shall not apply.

���� h.� The Executive Director of
the Higher Education Student Assistance Authority, in consultation with the Director
of the Division of Taxation, shall adopt rules and regulations pursuant to the
�Administrative Procedure Act,� P.L.1968, c.410 (C.52:14B-1 et seq.) to
effectuate the purposes of this act.� These regulations shall include, at a
minimum, provisions for the recapture of all, or a portion of, any tax credit
allowed pursuant to section 1 of P.L.��� , c.�� (C.������ ) (pending before the
Legislature as this bill) that is not used for the repayment of a qualified
taxpayer�s student loans in the two taxable years following the taxable year
for which the credit was allowed.

���� 2.� There are appropriated
from the General Fund to the Department of the Treasury such amounts as are
necessary to make payments of refunds pursuant to subsection g. of section 2 of
this act, subject to the approval of the Director of the Division of Budget and
Accounting.

���� 3.� This act shall take effect
immediately and shall apply to taxable years beginning on or after January 1
next following enactment.

STATEMENT

���� This bill establishes a
refundable gross income tax credit of up to $5,000 for student loan payments
made by qualified taxpayers.� A qualified taxpayer must have incurred a minimum
$20,000 in student loan debt for attendance at an institution of higher education
and have at least $5,000 in student loan debt outstanding to be eligible for a
tax credit.�

���� The bill requires a taxpayer
to submit with their gross income tax return such additional information as may
be required by the Higher Education Student Assistance Authority necessary to
determine the taxpayer�s eligibility for a tax credit.� Tax credits may be
awarded for the taxable years in which student loan payments were made.� The
bills requires a taxpayer to use the tax credit to repay a portion of their
student loans in the two tax years following the tax year for which a credit is
awarded.�

���� The bill appropriates from the
General Fund such amounts as are necessary to make payments of refunds to
taxpayers whose tax liability is reduced to below zero due to the bill.