More NJ families will benefit in 2021 from the
Child and Dependent Care Credit.
The taxable income threshold has increased to $150,000, from $60,000 in 2020. Resident taxpayers who are allowed a federal child tax credit are eligible for a credit against their NJ gross income tax
The credit will reduce the amount of New Jersey Gross Income Tax a taxpayer owes and may result in a refund even if no taxes are owed. Taxpayers may be able to claim the New Jersey Child and Dependent Care Credit if they:
- Paid expenses for the care of one or more qualifying individuals so that they are able to work or actively look for work;
- Are allowed the federal child and dependent care credit; and
- Have New Jersey taxable income of $150,000 or less.
The amount of the NJ credit is a percentage of the taxpayer’s federal child and dependent care credit and varies according to the amount of the taxpayer’s NJ taxable income.
|Tax Year 2021|
|NJ taxable income||NJ Credit|
|0 to $30,000||50% of federal credit|
|$30,001 to $60,000||40% of federal credit|
|$60,001 to $90,000||30% of federal credit|
|$90,000 to $120,000||20% of federal credit|
|$120,001 to $150,000||10% of federal credit|
This increased child care credit provides more relief to working families and is only for 2021.