Establishes child care contribution tax credit to employers subject to CBT or GIT for certain child care expenses for children of employees.

S1837 1R FISCAL ESTIMATE

LEGISLATIVE FISCAL ESTIMATE

[First Reprint]

SENATE, No. 1837

STATE OF NEW JERSEY

222nd LEGISLATURE

DATED: JUNE 2, 2026

SUMMARY

Synopsis:

Establishes child care contribution tax credit to
employers subject to CBT or GIT for certain child care expenses for children
of employees.

Type of Impact:

Annual State revenue decrease.

Agencies Affected:

Department of the Treasury.

Office of
Legislative Services Estimate

Fiscal Impact

Annual

State Revenue Loss

Up to $10.0 million

�

�The
Office of Legislative Services (OLS) estimates that this bill will decrease
annual State revenues by up to $10.0 million, reflecting the statutory cap on
the total value of tax credits that may be awarded in any tax year under the
bill.

�

The
OLS notes that the federal government offers a similar tax credit for employers
that incur qualifying employer-provided child care expenditures. �Based on
information published by the Congressional Research Service, employer
participation rates for the federal tax credit are relatively low, with less
than one percent of all federal corporate tax returns claiming the credit.

�

Assuming
comparable participation rates for the tax credits authorized under the bill,
the OLS anticipates that total annual revenue losses would approach the
statutory $10.0 million cap, with the majority of the impact occurring under
the corporation business tax and a smaller portion under the gross income tax.

BILL DESCRIPTION

����� This bill provides businesses with credits against the
corporation business tax and the gross income tax for certain employer-provided
child care expenditures.� The bill allows the tax credits to be claimed for
privilege periods and taxable years beginning on or after the date of
enactment, subject to an annual aggregate cap on total credits awarded.

����� The bill permits businesses to receive a credit equal
to 50 percent of qualifying child care expenditures incurred by the taxpayer,
up to a maximum of $100,000 per taxpayer per year. Qualifying expenditures
include costs incurred to acquire, construct, reconstruct, renovate, or
otherwise improve real property in New Jersey to be used as a qualified child care
center primarily for the children of individuals employed by the taxpayer.

����� The bill also provides that the credit may be claimed
for: (1) expenses related to the maintenance and operation of an on-site
qualified child care center; (2) amounts paid by the taxpayer to another entity
to provide child care services to employees� children at a qualified child care
center; or (3) payments made to employees to subsidize child care expenses
incurred for services provided at a qualified child care center.

����� The total value of all credits approved under the bill
is limited to $10 million per tax year.

FISCAL ANALYSIS

EXECUTIVE BRANCH

����� None received.

OFFICE OF LEGISLATIVE SERVICES

����� The OLS estimates that this bill will likely result in
an annual State revenue reduction of up to $10.0 million due to the application
of corporation business tax and gross income tax credits by employers that
incur qualifying employer-provided child care expenditures.

����� The OLS notes that the federal government offers a
similar tax credit for employers that incur qualifying employer-provided child care
expenditures.� Based on information published by the Congressional Research
Service, employer participation rates for the federal tax credit are relatively
low, with less than one percent of all federal corporate tax returns claiming
the credit.

����� Assuming a comparable participation rate for the tax
credit authorized by this bill, the OLS estimates that qualifying
employer-provided child care expenditures would exceed $10.0 million.� However,
the bill caps the total amount of tax credits awarded to qualifying taxpayers
at $10.0 million per year, and the annual State revenue loss cannot exceed this
statutory limit.� Accordingly, the OLS estimates the maximum annual State
revenue loss to be $10.0 million.

����� The OLS notes that actual participation rates and
credit utilization could vary significantly based on several factors, including
economic conditions, child care market dynamics, business investment appetite,
construction and operating costs, and employer demand for providing or
subsidizing child care services. �Accordingly, the OLS notes that the
anticipated impact of the bill on State revenue collections should be viewed as
a general approximation.

Section:

Revenue, Finance, and Appropriations

Analyst:

Patrick Walsh

Associate 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.).