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Bill

A 4891

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

2026-2027 Regular Session Introduced by Aura Dunn and 6 co-sponsors

NJEITC would become more generous (up to 45% of federal EITC), expand to ITIN filers, include domestic abuse survivors filing separately, and allow 18+ adults with no qualifying ch

Introduced, Referred to Assembly State and Local Government Committee
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WeVote Research Nonpartisan
Bill Summary · A 4891

Overview

Bill A-4891 (Session 222, New Jersey) seeks to increase benefit amounts and expand eligibility under the New Jersey Earned Income Tax Credit (NJEITC) program. It makes the NJEITC more generous over a multi-year period, allows eligibility for taxpayers with ITINs, and extends eligibility for victims of domestic abuse who file as married filing separately. The act takes effect immediately if enacted.

Purpose and intent

  • Improve financial support for low- to moderate-income working residents by increasing the NJEITC.
  • Align NJEITC eligibility with broader groups that face barriers to federal EITC access (specifically ITIN holders and domestic abuse survivors).
  • Provide a domestic violence exception to the federal filing rule that can otherwise disqualify such taxpayers from NJEITC benefits.

Key provisions and changes

  1. Incremental increase in NJEITC percentage

    • The credit is calculated as a percentage of the federal EITC that would be allowed for the same taxpayer and filing status.
    • The statute sets a schedule increasing the New Jersey credit from 40% of the federal EITC to 45% over a five-year period (exact annual steps are defined in the bill’s subsection 2(2)(a)-(q)).

  2. Eligibility for ITIN filers

    • The bill allows residents with Individual Taxpayer Identification Numbers (ITINs) to qualify for the NJEITC.
    • Eligibility logic follows the federal program, but NJ-specific calculations use the federal maximum credit amount based on filing status and number of qualifying children for each year starting in 2022.

  3. Domestic abuse survivors and filing status

    • Expands eligibility for those who file as married filing separately by providing an exception to the joint-filing requirement.
    • A qualifying widow/widower must meet all criteria including:
      • Living apart from the spouse at the end of the tax year,
      • Having been a victim of domestic abuse within the past three years,
      • Indicating on the gross income tax return that they meet the criteria.
    • This change recognizes that domestic abuse victims often cannot file jointly and would otherwise be ineligible for EITC.

  4. Age-related eligibility (no qualifying child)

    • Creates an additional pathway for residents aged 18 and older who cannot claim a qualifying child under federal rules to still be eligible for the NJEITC, provided they meet all other qualifications except for the federal age-based limits.
    • The calculation is based on the federal maximum credit amount for taxpayers with no qualifying child, applicable for years starting after January 1, 2020.

  5. ITIN and federal EITC parity

    • Allows ITIN holders to claim NJEITC even though they would not qualify for federal EITC, with calculations anchored to federal maximums by filing status and family size.

  6. Administration and interaction with state benefits

    • The Director of the Division of Taxation must establish a program for distributing NJEITC credits.
    • The NJEITC credit remains a credit against New Jersey gross income tax and can generate an overpayment in certain cases, subject to the statute’s overpayment handling rules.
    • The credit cannot be counted as income for determining eligibility for other state programs.

  7. Pro-rating for part-year residents

    • For part-year residents, the NJEITC amount is pro-rated based on the portion of the year the taxpayer resided in New Jersey (15 days or more constitutes a month).

Affected individuals and entities

  • New Jersey resident individuals eligible for the EITC at the federal level, including:
    • Taxpayers with ITINs (new eligibility).
    • Domestic abuse survivors who file as married filing separately (new eligibility pathway).
    • Adults 18+ without qualifying children (new eligibility pathway).
  • Taxpayers who file jointly or separately, depending on the new criteria, may see changes in eligibility and benefit amounts.
  • The New Jersey Division of Taxation, which would administer and distribute the NJEITC program.

Procedural and timeline aspects

  • The Act specifies an immediate effective date, meaning provisions would take effect upon enactment.
  • The bill codifies a staged increase to the NJEITC rate (40% to 45%) over five years, as detailed in the percentage schedule.
  • Provisions for ITIN eligibility, domestic abuse exceptions, and no-qualifying-child eligibility would apply to tax years beginning in the stated periods (notably 2020+ references align with federal EITC timelines).

Summary in plain terms

  • NJEITC would become more generous, rising to 45% of the federal EITC over five years.
  • People with ITINs could receive NJEITC.
  • Domestic abuse survivors who file separately could qualify for NJEITC without requiring joint filing.
  • Adults 18+ without qualifying children could qualify for NJEITC if they meet all federal-like criteria.
  • The state would administer and coordinate the credit, with pro-rating for part-year residents and rules ensuring proper treatment of credits against state tax liabilities and potential overpayments.
  • The bill aims to broaden and strengthen anti-poverty support for working New Jersey residents.

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

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