We understand the enormous financial strain child care costs can place on working families. Under a new law signed in 2018, roughly 70,000 New Jersey taxpayers are eligible for relief through the establishment of a Child and Dependent Care Tax Credit.
Under the law, eligible resident taxpayers who are allowed a federal credit for expenses they incur for the care of one or more qualifying individuals are now eligible for a credit against their New Jersey Gross Income Tax. A qualifying individual can be a child under age 13 or a spouse or dependent who lived with the taxpayer for more than half the year and is physically or mentally incapable of self-care.
Information on how to claim the Child and Dependent Care Credit can be found on page 34 of the NJ-1040 Instructions.
The credit will reduce the amount of New Jersey Gross Income Tax a taxpayer owes, but won't result in a refund if no taxes are owed. Taxpayers may be able to claim the New Jersey Child and Dependent Care Credit if they:
The amount of the New Jersey credit is a percentage of the taxpayer's federal child and dependent care credit and varies according to the amount of the taxpayer's New Jersey taxable income.
|If NJ taxable income is:||Amount of the NJ credit is:|
|Not over $20,000||50% of federal credit|
|over $20,000 but not over $30,000||40% of federal credit|
|over $30,000 but not over $40,000||30% of federal credit|
|over $40,000 but not over $50,000||20% of federal credit|
|over $50,000 but not over $60,000||10% of federal credit|
The maximum New Jersey credit cannot exceed $500 for one qualifying individual or $1,000 for two or more qualifying individuals.