NJBIA supported legislation approved by the Assembly and Senate on Thursday that revises the state’s child and dependent care gross income tax credit.
The bill, S-4065, sponsored by Assemblywoman Dawn Addiego (D-8), provides a childcare tax credit for eligible taxapayers earning up to $150,000 a year for the 2021 tax year. The bill now goes to Gov. Phil Murphy for his signature.
“This bill will help improve access to childcare, which will help the industry and an entire workforce that relies on childcare,” said NJBIA Director of Government Affairs Alexis Bailey.
“Childcare access is a cornerstone of our economic recovery as we emerge from the pandemic,” Bailey said. “New Jersey continues to face unprecedented workforce shortages across all industries. Nationally, our participation rate among female workers is at its lowest point in three decades. Any legislation like this that can increase childcare access will help our state.”
New Jersey’s child and dependent care tax credit is available for taxpayers who incur expenses for household services and the care of a child or dependent which enable the taxpayer to be employed.
The bill revises the credit so that it will be refundable, meaning a taxpayer could receive a cash refund if the credit amount is in excess of their gross income tax liability. Under current law, the credit is nonrefundable.
Bailey said 19% of mothers of infants and toddlers in New Jersey left the workforce during the pandemic due to childcare issues.
She said the tax credits will also help childcare centers throughout the state.
“Many childcare businesses have closed their doors and others struggle to stay afloat,” Bailey said. “Tax credits that can be provided families to assist with childcare expenses will also help support these small businesses and enhance their ability to remain open.”