Increases benefit amounts and expands eligibility under New Jersey earned income tax credit program.

S3797

SENATE, No. 3797

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MARCH 5, 2026

Sponsored by:

Senator� M. TERESA RUIZ

District 29 (Essex and Hudson)

SYNOPSIS

���� Increases benefit amounts and expands eligibility
under New Jersey earned income tax credit program.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
increasing benefit amounts and expanding eligibility
under the New Jersey earned income tax credit program, amending P.L.2000, c.80.

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

���� 1.��� Section 2 of P.L.2000,
c.80 (C.54A:4-7) is amended to read as follows:

���� 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
]

section
.

���� (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
, but before January 1, 2022;

����
(m)� 41% for taxable years
beginning on or after January 1, 2022, but before January 1, 2023;

����
(n)�� 42% for taxable years
beginning on or after January 1, 2023, but before January 1, 2024;

����
(o)�� 43% for taxable years
beginning on or after January 1, 2024, but before January 1, 2025;

����
(p)�� 44% for taxable years
beginning on or after January 1, 2025, but before January 1, 2026; and

����
(q)�� 45% for taxable years
beginning on or after January 1, 2026
.

���� (3)
(a)
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.

����
(b)�� A taxpayer shall not
be required to satisfy the joint filing requirement imposed pursuant to
subparagraph (a) of this paragraph and section 32 of the federal Internal
Revenue Code of 1986 (26 U.S.C. s.32) if the taxpayer files as married filing
separately and the taxpayer: (i) was living apart from the taxpayer�s spouse on
the last day of the taxable year for which the credit is claimed; (ii) was a
victim of domestic abuse within the past three years; and (iii) indicates on
the taxpayer�s gross income tax return that the taxpayer meets the criteria set
forth in this subparagraph.� Calculation of the New Jersey earned income tax
credit available to taxpayers pursuant to this paragraph shall be predicated on
the federal maximum credit amount based on the filing status and number of
qualifying children of the taxpayer for each taxable year beginning on and
after January 1, 2022.� For purposes of this subparagraph, �domestic abuse�
means physical, psychological, sexual, or emotional abuse inflicted by the
taxpayer�s spouse, including, but not limited to, efforts to control, isolate,
humiliate, and intimidate, or to undermine the taxpayer�s or another member of
the household�s ability to reason independently.

���� (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.

����
(5)�� A taxpayer may claim
a credit pursuant to this section whether the taxpayer has a Social Security
number or an Individual Taxpayer Identification Number if, but for section 32(c)(1)(e)
of the Internal Revenue Code (26 U.S.C. s.32), the taxpayer would be eligible
to claim the federal 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 credit amount based on the filing
status and number of qualifying children of the individual for each taxable
year beginning on and after January 1, 2022.

���� 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.

(cf: P.L.2021, c.130, s.1)

���� 2.��� This act shall take
effect immediately.

STATEMENT

���� This bill increases the
benefit amounts under the New Jersey earned income tax credit (NJEITC) program
and expands eligibility for taxpayers with Individual Taxpayer Identification
Numbers (ITIN) and those taxpayers who have been victims of domestic abuse

���� Currently, the program
provides a tax credit equal to 40 percent of the federal earned income tax
credit.� The bill increases this amount from 40 percent to 45 percent over a
five-year period.

���� This bill allows taxpayers
with ITINs to qualify for the NJEITC program.� Under the federal earned income
tax credit program, a taxpayer, including a spouse if filing a joint return, is
required to have a Social Security number issued by the federal Social Security
Administration in order to qualify.� Eligibility for the NJEITC program is
generally linked to the federal earned income tax credit program; thus, an
individual taxpayer who has an ITIN does not qualify for either the federal or
State programs.� The bill modifies the eligibility criteria under the NJEITC
program to allow taxpayers with ITINs to qualify for the tax credit.

���� The bill also expands
eligibility under the NJEITC program for taxpayers who are victims of domestic
abuse.� Under the federal program, if a taxpayer is married, the taxpayer is
required to file a joint return with their spouse to be eligible for the federal
earned income credit.� However, victims of domestic abuse typically file as
married filing separately, losing their federal earned income credit and NJEITC
program eligibility in the process.

���� The bill exempts a married
taxpayer from the joint filing requirement if the taxpayer files as married
filing separately and the taxpayer: (i) was living apart from the taxpayer�s
spouse on the last day of the taxable year for which the credit is claimed;
(ii) was a victim of domestic abuse, as defined by the bill, within the past
three years; and (iii) indicates on the taxpayer�s gross income tax return that
the taxpayer meets the criteria set forth in the bill.