Expands the eligibility period for indigent legal service attorneys to receive certain loan forgiveness and increases loan reimbursement for certain attorneys who work in legal services with indigent clients

2025 Regular Session Introduced by George Alvarez and 46 co-sponsors

Creates a New Jersey gross income tax credit for 3–5 star Grow NJ Kids- rated child care costs for children under 6, with refunds for low earners and carryforwards.

PRINT NUMBER 1602A

Summary of Bill A 1602

note on potential discrepancy in title vs. text: The bill’s title references expanding eligibility for indigent legal service loan forgiveness, but the introduced version text provided below outlines a New Jersey gross income tax credit for child care expenses. The provisions described reflect the introduced child care credit text, not a loan-forgiveness program. If there is a separate bill with the indigent legal services loan forgiveness language, it is not included in this introduced version.

Overview

Purpose (as introduced text): Create a gross income tax credit for a portion of child care expenses incurred for children enrolled in licensed child care centers, with credit amounts tied to the center’s Grow NJ Kids rating (3, 4, or 5 stars).

Status: Introduced in the Assembly on January 9, 2024; referred to the Assembly Children, Families and Food Security Committee; listed as later referred to Higher Education in 2025.

Primary sponsor: Jo Anne Simon (with a broad group of co-sponsors).

Key Provisions

Credit against New Jersey gross income tax for the taxable year:

15% of child care costs for each child under age 6 at centers with a 3-star Grow NJ Kids rating.
17.5% for centers with a 4-star rating.
20% for centers with a 5-star rating.
If a center holds multiple ratings during the year, apply the higher rating.

Eligible child: Each child under six years old for any part of the tax year qualifies for the credit for that year.

Refundability and carryforward:

For taxpayers with gross income under $25,000: the credit is refundable if it exceeds tax liability (no interest on the refund per N.J.S. 54A:9-7).
For taxpayers with gross income of $25,000 or more: any unused credit is carried forward to the next tax year, but not beyond that following year.

Interaction with other credits:

The credit cannot be claimed in the same year as New Jersey’s child and dependent care credit (established in 2018). Taxpayers must choose between the two credits in the same year.

Credit ordering:

The Director of the Division of Taxation will determine the order of applying this credit relative to other credits.

Affected Parties

Taxpayers who pay for child care for children under six at licensed centers, particularly those with Grow NJ Kids ratings (3–5 stars).

Licensed child care centers, as the rating (Grow NJ Kids) directly affects the credit value parents receive.

Tax administration (Division of Taxation), which administers refundable credits, carryforwards, and credit ordering.

Implementation & Timeline

Effective: The bill states it shall take effect immediately and apply to taxable years beginning January 1 of the year following enactment.

Administration: Requires guidance from the Department of the Treasury and the Director of the Division of Taxation to determine credit application order with other credits.

Practical Implications

For eligible families, the credit incentivizes use of higher-rated licensed child care centers.

Lower-income households (<$25,000 gross income) may receive a cash refund if the credit exceeds their tax liability.

The bill creates a potential shift in after-tax child care affordability and may affect state revenue depending on uptake and center ratings.

If you need, I can also compare this introduced version with the bill’s stated purpose about indigent legal services loan forgiveness, once the correct text is provided.