Provides tax credits to certain employers of employees less than 18 years old.

S4277

SENATE, No. 4277

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 14, 2026

Sponsored by:

Senator� TROY SINGLETON

District 7 (Burlington)

SYNOPSIS

���� Provides tax credits to certain employers of
employees less than 18 years old.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act

providing tax credits to certain employers of
employees less than 18 years old and
supplementing

P.L.1966, c.113 (C.34:11-56a et seq.), P.L.1945, c.162 (C.54:10A-1 et
seq.) and Title 54A of the New Jersey Statutes.

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

���� 1.��� As used in P.L.��� ,
c.���� (C.������� ) (pending before the Legislature as this bill):

���� �Commissioner� means the
Commissioner of Labor and Workforce Development.

���� �Employer� means any nongovernmental
business entity including, but not limited to, a nonprofit organization, a
corporation, S corporation, limited liability company, partnership, limited
partnership, and sole proprietorship, and shall include all entities related by
common ownership or control.

���� �Tax year� means the calendar
year or fiscal year in which a taxpayer�s gross income tax or corporation
business tax liability is due and payable.

���� 2.��� a. �There is established
in the Department of Labor and Workforce Development a program, administered by
the commissioner, to provide tax credits to employers of employees under the
age of 18. �The purpose of the program is to provide tax credits to employers
of employees under the age of 18 to help to offset the cost to the employer of
any wage increases for those employees caused by the enactment of P.L.2019, c.32
(C.34:11-56a39 et al.), including the cost to the employer of corresponding
increases in payroll taxes that employer paid on those workers� wages.

���� b.��� Prior to January 1, 2032,
an employer of employees under the age of 18 subject to the provisions of P.L
1966, c.113 (C.34:11-56a et seq.), including the provisions of any fair minimum
wage order or regulation promulgated pursuant to that act, may apply to the
commissioner for an award of tax credits under this section. �A tax credit
allowed pursuant to this section shall be in the amount provided in subsections
d. and e. of this section against the corporation business tax imposed pursuant
to section 5 of P.L.1945, c.162 (C.54:10A-5) or the gross income tax imposed
pursuant to the �New Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et seq.,
whichever of the two taxes is applicable to the employer.

���� c.���� Prior to January 1, 2034,
an employer of employees under the age of 18 subject to the provisions of P.L
1966, c.113 (C.34:11-56a et seq.), including the provisions of any fair minimum
wage order or regulation promulgated pursuant to that act, may apply to the
commissioner for an award of tax credits under this section. �A tax credit
allowed pursuant to this section shall be in the amount provided in subsections
d. and e. of this section against the corporation business tax imposed pursuant
to section 5 of P.L.1945, c.162 (C.54:10A-5) or the gross income tax imposed
pursuant to the �New Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et seq.,
whichever of the two taxes is applicable to the employer.

���� d.��� (1) The final amount of
the tax credit provided to an employer for employees under the age of 18 employed
by the employer during a tax year shall be a preliminary amount of the tax
credit, which is the amount by which the wages and payroll taxes which the
employer is required to pay each employee under the age of 18 the employer
employs pursuant to P.L.2019, c.32 (C.34:11-56a39 et al.) during the tax year
exceeds the amount that the employer actually paid for the employee under the
age of 18 in wages and payroll taxes in the last preceding calendar year (as
adjusted pursuant to subparagraph (c) of this paragraph), provided that:

���� (a)�� if the number of hours
worked during the tax year by an employee under the age of 18 employed by the
employer is equal to the number of hours the employee under the age of 18
worked for the employer during the last preceding calendar year, then the
preliminary amount of the tax credit for each of the hours worked shall be in
the amount that remains after the amount actually paid for the employee under
the age of 18 in wages and payroll taxes during the last preceding calendar
year (as adjusted pursuant to subparagraph (c) of this paragraph) is subtracted
from the amount which is required to be paid for the employee under the age of
18 in payroll taxes and in wages pursuant to the minimum wage rate which
applies to the tax year;

���� (b)�� if the number of hours
worked during the tax year by an employee under the age of 18 employed by the
employer is greater than the number of hours worked by the employee under
the age of 18 by the employer during the last preceding calendar year, then the
preliminary amount of the tax credit shall be calculated in two parts and the
sum of the two parts shall be the preliminary amount of the tax credit. �In the
first part of the calculation, regarding the hours worked during the tax year
which are equal to the number of hours worked during the last preceding
calendar year, the preliminary amount of the tax credit shall be calculated in
the same manner as the credit is calculated in subparagraph (a) of this
paragraph. �In the second part of the calculation, regarding the hours worked
during the tax year which are in addition to the number of hours worked during
the last preceding calendar year, the preliminary amount of the tax credit for
each additional hour shall be calculated in the same manner as the credit is
calculated in subparagraph (a) of this paragraph, except that it shall be
presumed that the additional number of hours worked by the employee under the
age of 18 would have been paid at the minimum wage rate in effect during the
last preceding calendar year (as adjusted pursuant to subparagraph (c) of this
paragraph), and the preliminary amount of the tax credit for each of those
hours of work shall be calculated by subtracting that presumed rate from the
actual minimum wage rate for the tax year; and

���� (c)�� In making any of the
calculations in this paragraph, the actual rate of pay paid to an employee under
the age of 18 in the preceding calendar year shall be increased by whichever is
the larger of:

���� (i)��� the increase in the
State minimum wage that would have occurred, for the applicable tax year, if
P.L.2019, c.32 (C.34:11-56a39 et al.) had not been enacted; or

���� (ii)�� any increase in the
federal minimum hourly wage rate set for the applicable tax year pursuant to
section 6(a)(1) of the federal "Fair Labor Standards Act of 1938" (29
U.S.C. s.206(a)(1)).

���� (2)�� If the number of hours
worked during the tax year by an employee under the age of 18 employed by the
employer is less than the number of hours worked during the last preceding
calendar year, then the employer shall not be eligible for a tax credit under
this section for that tax year for that employee under the age of 18.

���� e.���� An employer may qualify
for a tax credit pursuant to P.L. , c. (C. )
(pending before the Legislature as this bill) in a taxable year or privilege
period beginning on or after January 1, 2026. �An employer who qualifies for a
tax credit pursuant to this section with respect to hours worked during a tax
year may use the tax credit when determining the employer�s estimated tax for
the purpose of making installment payments of the tax during that tax year. �The
commissioner shall, upon request, provide assistance to the employer in
estimating the likely amount of the tax credit to assist the employer in
determining the amount of the tax credit and the installment payments of the
tax during a tax year. �For tax years 2026 and 2027, the Director of the
Division of Taxation may waive in part, or entirely, penalties for underpayment
of taxes in connection with installment payments to the extent that the
director finds that the underpayment occurred because of a good faith error of
the employer in calculating the amount of the credit. �Any misclassification of
an employee by an employer who knowingly, in applying for the tax credit,
falsely represents an employee as an employee under the age of 18 shall be
regarded as a violation of the applicable State tax law and shall be subject to
three times the amount of penalties otherwise provided in that law for
violations of the law and, for that violation, the penalty shall not be
waived, including during tax years 2019 and 2020.

���� f.���� An employer shall not
be eligible for a tax credit pursuant to P.L.��� , c.���� (C.������� ) (pending
before the Legislature as this bill) if the commissioner determines that the
employer reduced the wages that the employer paid to any employee under the age
of 18 employed by the employer to be eligible for a tax credit under P.L. ,
c.���� (C.������� ) (pending before the Legislature as this bill) in a future
year.

���� g.��� The combined value of
all tax credits approved annually by the commissioner pursuant to this section
shall not exceed $10,000,000 in a calendar year.� The commissioner shall
annually review and report to the Legislature in accordance with section 2 of
P.L.1991, c.164 (C.52:14-19.1) on the sufficiency of the tax credit cap
authorized pursuant to this subsection and have any recommendations with respect
thereto to the Legislature.

���� 3.��� a. �Notwithstanding any
provision of the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.) to the contrary, the commissioner, in consultation with
the State Treasurer, may adopt, upon filing with the Office of Administrative
Law, such regulations that the commissioner deems necessary to implement the
provisions of P.L.��� , c.���� (C.������� ) (pending before the Legislature as
this bill), which regulations shall be effective for a period not to exceed 180
days from the date of the filing. �The commissioner shall thereafter amend,
adopt, or readopt the regulations in accordance with the requirements of
P.L.1968, c.410 (C.52:14B-1 et seq.). �The regulations adopted by the
commissioner shall include the following:

���� (1)�� standards and procedures
for determining which employees are employees under the age of 18 and are
subject to increases in the minimum wage for the purpose of determining the
eligibility of employers for tax credits;

���� (2)�� any additions to, or
modifications of, wage record-keeping requirements needed to calculate the
amounts of tax credits pursuant to P.L.��� , c.���� (C.������� ) (pending
before the Legislature as this bill);

���� (3)�� continuing to provide
the calculation, for each year, of what the minimum wage would have been under
section 5 of P.L.1966 (C.34:11-56a4) and paragraph 23 of Article I of the New
Jersey Constitution if P.L.2019, c.32 (C.34:11-56a39 et al.) was not enacted;
and

���� (4)�� a method for employers
to submit certificates of credit to the Division of Taxation pursuant to
sections 4 and 5 of P.L. , c. (C. )
(pending before the Legislature as this bill).

���� b.��� Beginning the year next
following the year in which P.L. , c. (C. )
(pending before the Legislature as this bill) takes effect and every two years
thereafter, the commissioner shall prepare a report concerning the award of tax
credits under P.L. , c. (C. )
(pending before the Legislature as this bill), and submit the report to the
Governor, and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the
Legislature. �Each biennial report required under this subsection shall include
the names and locations of, and the amount of tax credits allowed to, each
employer allowed a tax credit under P.L.��� , c.���� (C.������� ) (pending
before the Legislature as this bill).

���� 4.��� a.� The Director of the
Division of Taxation in the Department of the Treasury shall allow an employer
a credit against the corporation business tax imposed pursuant to section 5 of
P.L.1945, c.162 (C.54:10A-5) in the amount certified by the Commissioner of
Labor and Workforce Development as the taxpayer�s tax credit amount pursuant to
section 2 of P.L. , c. (C. )
(pending before the Legislature as this bill). �To claim the tax credit amount
for a privilege period, the taxpayer shall submit to the director the
certificate of credit issued for that privilege period by the commissioner
pursuant to section 2 of P.L. , c.���� (C.������� )
(pending before the Legislature as this bill).

���� b.��� An employer shall apply
the credit awarded against the employer�s liability under section 5 of
P.L.1945, c.162 (C.54:10A-5) for the privilege period during which the director
allows the employer a tax credit pursuant to this section.� An employer shall
not carry forward an unused credit.

���� c.���� The director shall
prescribe the order of priority of the application of the credit allowed under
this section and any other credits allowed by law against the tax imposed under
section 5 of P.L.1945, c.162 (C.54:10A-5). The amount of the credit applied under
this section against the tax imposed pursuant to section 5 of P.L.1945, c.162
(C.54:10A-5) for a privilege period, together with any other credits
allowed by law, shall not reduce the tax liability to an amount less than the
statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162
(C.54:10A-5).

���� 5.��� a.� The Director of the
Division of Taxation in the Department of the Treasury shall allow an employer
a credit against the gross income tax imposed pursuant to the �New Jersey Gross
Income Tax Act� N.J.S.54A:1-1 et seq. in the amount certified by the Commissioner
of Labor and Workforce Development as the taxpayer�s tax credit amount pursuant
to section 2 of P.L. , c. (C. )
(pending before the Legislature as this bill). To claim the tax credit amount
for a taxable year, the taxpayer shall submit to the director the certificate
of credit issued for that taxable year by the commissioner pursuant to section
2 of P.L. , c. (C. ) (pending
before the Legislature as this bill).

���� b.��� An employer shall apply
the credit awarded against the employer�s liability under the �New Jersey Gross
Income Tax Act� N.J.S.54A:1-1 et seq. for the taxable year during which the
director allows the employer a tax credit pursuant to P.L.��� , c.����
(C.������� ) (pending before the Legislature as this bill). �An employer shall
not carry forward an unused credit.

���� c.���� The director shall
prescribe the order of priority of the application of the credit allowed under
this section and any other credits allowed by law against the tax imposed under
the �New Jersey Gross Income Tax Act� N.J.S.54A:1-1 et seq. �The amount of the
credit applied under this section against the tax imposed pursuant to the �New
Jersey Gross Income Tax Act� N.J.S.54A:1-1 et seq. for a taxable year, together
with any other credits allowed by law, shall not reduce the tax liability to an
amount less than zero. �No tax credit shall be allowed pursuant to this section
for any wages and payroll taxes included in the calculation of any other tax
credit granted pursuant to a claim made on a tax return filed with the director
for a period of time that coincides with the taxable year for which a tax
credit authorized pursuant to this section is allowed.

���� d.��� A business entity that
is classified as a partnership for federal income tax purposes shall not be
allowed the tax credit directly under N.J.S.54A:1-1 et seq., but the amount of
credit of the taxpayer in respect of a distributive share of partnership income
shall be determined by allocating to the taxpayer that proportion of the credit
acquired by the partnership that is equal to the taxpayer�s share, whether or
not distributed, of the total distributive income or gain of the partnership
for its taxable year ending within or with the taxpayer�s taxable year.

���� A taxpayer that is a New
Jersey S corporation shall not be allowed the tax credit directly under
N.J.S.54A:1-1 et seq., but the amount of credit of a taxpayer in respect of a
pro rata share of S corporation income shall be determined by allocating to the
taxpayer that proportion of the credit acquired by the New Jersey S corporation
that is equal to the taxpayer�s share, whether or not distributed, of the total
pro rata share of S corporation income of the New Jersey S corporation for its
privilege period ending within or with the taxpayer�s taxable year.

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

STATEMENT

���� This bill establishes a
program administered by the Commissioner of Labor and Workforce Development to
provide tax credits to employers who employ employees less than 18 years old
who are subject to the State minimum wage to offset the cost to the employer of
any increases in the wages and payroll taxes of those employees caused by the
enactment of P.L.2019, c.32 (C.34:11-56a39 et al.).� Under the program, an
employer is eligible for a refundable tax credit against the corporation
business tax or the gross income tax, as applicable, for the cost to the
employer of those increases.

���� The bill limits the combined
value of all tax credits approved under the bill to a maximum of $10 million
during any calendar year.