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Bill

S 3797

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

2026-2027 Regular Session Introduced by Teresa Ruiz

The bill increases NJEITC to 45% of the federal credit over time, and expands eligibility to ITIN filers and certain domestic abuse victims filing separately.

Introduced in the Senate, Referred to Senate Budget and Appropriations Committee
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Bill Summary · S 3797

Summary of Bill S 3797 (Session 222) – New Jersey Earned Income Tax Credit (NJEITC)

Purpose and intent

  • The bill aims to increase benefit amounts and broaden eligibility under New Jersey’s Earned Income Tax Credit program.
  • It modifies the existing framework in P.L.2000, c.80 to align NJEITC more closely with federal EITC concepts while expanding who may qualify.

Key provisions and changes

1) Increase in NJEITC benefit percentage over time

  • The NJEITC is a credit against New Jersey gross income tax equal to a percentage of the federal EITC for the same taxpayer.
  • The bill gradually increases the NJEITC percentage from the current 40% to 45% over a defined period:
    • The schedule in the bill sets stepwise percentages for different federal tax year ranges, culminating at 45% for taxable years beginning on or after January 1, 2026.
    • This is achieved by amending the calculation formula in subsection (2) to specify the percentage applicable to each tax year.

2) Eligibility expansion to include ITIN holders

  • The bill allows residents who have an Individual Taxpayer Identification Number (ITIN) to claim the NJEITC.
  • Under current practice, federal EITC generally requires a Social Security number (SSN). The NJEITC currently mirrored federal eligibility, excluding ITIN filers.
  • The new language permits ITIN holders to be eligible for the NJEITC, with the calculation based on the federal maximum credit amount corresponding to filing status and number of qualifying children for each year starting 2022 onward.

3) Expanded eligibility for domestic abuse victims

  • The bill expands eligibility for individuals who file separately due to domestic abuse.
  • Specifically, a married filing separately taxpayer can qualify for NJEITC if:
    • They were living apart from their spouse on the last day of the taxable year,
    • They were a victim of domestic abuse within the past three years, and
    • They indicate on their NJ gross income tax return that they meet these criteria.
  • This change addresses an exemption that previously limited victims of domestic abuse who file separately from receiving EITC benefits.

4) Other alignment and administrative aspects

  • The bill preserves that NJEITC is a credit against the tax due under New Jersey law, with handling of excess credits similar to credits and overpayments under state law.
  • It requires the Director of the Division of Taxation to establish a program for distributing NJEITC credits.
  • Provisions regarding pro-ration for part-year residents remain in place, and ITIN eligibility applies with the same base federal considerations adjusted for New Jersey.

Who is affected

  • Low- and moderate-income New Jersey residents eligible for the federal EITC, including:
    • Taxpayers with ITINs (newly eligible for NJEITC)
    • Victims of domestic abuse who file separately (newly eligible under the specified criteria)
    • Households with minimal or no qualifying children, as the calculation uses federal maximums corresponding to filing status and children
  • Taxpayers who are part-year residents (credit pro-ration continues)

Procedural and timeline notes

  • Effective date: Immediate upon enactment.
  • Administrative implementation: The Department of the Treasury’s Division of Taxation will establish and administer the NJEITC distribution program under the updated framework.

Summary in plain terms

S 3797 increases the NJEITC benefit by moving from 40% to 45% of the federal credit over time, expands eligibility to include ITIN filers, and extends domestic abuse protections so more victims who file separately can receive the credit. It preserves current pro-ration rules for part-year residents and requires the state to manage the credit distribution through its tax agency.

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

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