WeVote
Log In

Bill

Bill

S 243

Increases benefit amount under New Jersey Earned Income Tax Credit program from 40 percent to 60 percent of federal benefit amount.

2026-2027 Regular Session Introduced by Shirley Turner

The bill raises New Jersey’s EITC from 40% to 60% of the federal EITC, increasing refundable tax relief for eligible low- and moderate-income filers starting in 2022.

Introduced in the Senate, Referred to Senate Budget and Appropriations Committee
0
WeVote Research Nonpartisan
Bill Summary · S 243

Summary of Bill S 243 (Session 222) – New Jersey

Title: Increases benefit amount under New Jersey Earned Income Tax Credit program from 40 percent to 60 percent of federal benefit amount

Jurisdiction: New Jersey

Status: Introduced in the Senate; referred to Senate Budget and Appropriations Committee (as of 2026-01-13)

Sponsor: Primary sponsor not listed in the provided text; Co-sponsor: Shirley Turner

Effective Date: Immediate (takes effect upon enactment)

1) Purpose and Intent

  • The bill seeks to expand the New Jersey Earned Income Tax Credit (EITC) by increasing the state's credit portion from 40% to 60% of the corresponding federal EITC for tax year 2022 onward.
  • The goal is to provide greater tax relief to low- and moderate-income workers and families by aligning a larger share of the federal EITC benefit with the New Jersey credit.

2) Key Provisions and Changes

  • Structural framework: The bill amends P.L.2000, c.80 to modify the percentage of the federal EITC that is used to calculate the New Jersey EITC.

  • Calculation:

    • Currently (before enactment), the New Jersey EITC equals 40% of the federal EITC amount for qualifying taxpayers.
    • The bill changes the percentage to 60% beginning with tax year 2022.
    • The underlying federal EITC remains calculated under the federal Internal Revenue Code (26 U.S.C. §32), with New Jersey mirroring the applicable federal eligibility rules and thresholds.

  • Eligibility and claim mechanics (unchanged in principle, though affected by the higher percentage):

    • The New Jersey EITC is a refundable credit against New Jersey gross income tax.
    • A taxpayer eligible for the federal EITC for the same taxable year may claim the New Jersey EITC proportional to the specified percentage (now 60%) of the federal credit amount.
    • Provisions regarding joint filers, head of household, surviving spouse statuses, and age-based eligibility for residents without qualifying children remain aligned with existing federal EITC rules and NJ-specific rules (including the scenarios where individuals cannot claim the federal credit due to age or other limits).
    • For part-year residents, the credit is prorated based on the months of residency in New Jersey (15 days or more constitutes a month).

  • Interaction with other programs:

    • The credit is applied against NJ tax due after other credits and payments; if the credit exceeds the tax due, the excess is an overpayment, but certain statutory treatment for overpayments applies.
    • The EITC amount is not counted for determining eligibility or benefit levels of other state programs to the extent permitted by federal law.

  • Administrative:

    • The Director of the Division of Taxation is responsible for establishing the distribution program for these credits under the amended statute.

3) Who/What is Affected

  • Taxpayers eligible for the federal EITC in New Jersey will see a larger state credit:
    • The New Jersey EITC will be 60% of the federal EITC amount starting with the 2022 tax year.
  • Part-year residents:
    • The credit remains prorated for residents who live in New Jersey for less than the full year.
  • Taxpayers without qualifying children who are eligible under federal rules (including age-based considerations) continue to be served under the NJ EITC framework, now with an increased credit amount.
  • State Treasury and the Department of Treasury (Division of Taxation):
    • Administrative responsibilities to implement and distribute the larger credit.

4) Procedural and Timeline Aspects

  • Effective date: Immediate upon enactment (applied to tax year 2022 and thereafter).
  • Legislative action history:
    • Introduced in the Senate on 2026-01-13.
    • Referred to the Senate Budget and Appropriations Committee.
  • The bill cites alignment with existing statutory structure (P.L.2000, c.80) and subsequent amendments (with reference to prior updates such as P.L.2021, c.130).

5) Potential Impacts and Considerations

  • Economic impact: Increasing the NJ EITC to 60% of the federal amount is expected to provide greater refundable tax relief to low- and moderate-income households, potentially boosting household funds and discretionary spending.
  • Revenue impact: The higher credit reduces net state tax revenue for eligible filers; overall fiscal impact would depend on taxpayer uptake and federal EITC interactions.
  • Policy rationale: Enhances alignment with federal support and may reduce poverty-related measures by increasing after-tax income for eligible families.

If you’d like, I can provide a side-by-side comparison showing the current versus proposed tax-year 2022+ credit calculations, or a brief summary suitable for a 1-page briefing.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.