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New Jersey Is One Of The States With The Most Generous Child Tax Credit

According to a new study that demonstrates how these state-level tax laws can aid in reducing child poverty, New Jersey’s recently increased child tax credit currently ranks among the nation’s most generous. The Institute on Taxation & Economic Policy, based in Washington, D.C. did an analysis which found that a total of 14 states, including New Jersey, provide people with tax credits to assist in defraying the costs of having children. Gov. Phil Murphy and legislators reached an agreement earlier this year aimed at doubling the size of New Jersey’s maximum child tax credit, which was originally set at $500 per kid under the age of 6.

NJ Provides A Refundable Credit

According to the ITEP study released earlier this month, New Jersey is one of just five states having credits that big or larger. Only Colorado ($1,200) & Oregon ($1,138) provide their citizens with a per-child tax credit (CTC) that is as generous as New Jersey’s. According to the research, New Jersey is one of few states that provide a “refundable” credit, which allows qualified individuals to claim the entire amount regardless of the amount of state income taxes they owe. “Refundability is the key to the CTC’s success,” the paper stated.

The improved federal child tax credit, which was provided in 2021 under the American Rescue Plan Act, was debated last year by federal politicians in Washington, D.C., and was the subject of New Jersey’s child tax credit. Studies show that the government incentives, which have since expired, helped reduce child poverty and other financial hardships, including for Black and Hispanic families, who are more disadvantaged. Several federal senators, including New Jersey’s Democratic U.S. Senator Cory Booker, continue to push for the reinstatement of an improved federal credit. According to the most recent U.S. census data, New Jersey’s statewide rate of child poverty decreased from 14.2% to 12.9% last year. The figures show that in 2022, New Jersey’s child poverty percentage was still higher than the state’s overall poverty rate of 9.7%.

The Per-Child Tax Credit Values

The CTC in New Jersey is intended for people who earn up to $80,000 yearly and have children below six years of age. The per-child credit had a value of $500 for families earning up to $30,000 annually, $400 for families earning between $30,000 and $40,000, $300 for families earning between $40,000 and $50,000, $200 for families earning between range of $50,000 & $60,000, and $100 for families earning between $60,000 and $80,000 annually in the first year it was available.

Murphy and lawmakers made changes to the law in late June, making the per-child tax credit worth $1,000 for those making up to $30,000 annually, $800 for those making between $30,000 and $40,000, $600 for those making between $40,000 and $50,000, $400 for those making between $50,000 and $60,000, and $200 for those making in the range of $60,000 to $80,000 annually for the 2023 tax year.

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