New Jersey lawmakers reach budget deal on tax relief measures
TRENTON, New Jersey (WABC) -- New Jersey Governor Phil Murphy and Democratic legislative leaders announced a budget deal Monday on key tax relief measures for lower- and middle-income residents with dependents.
It includes increased property tax relief and income tax rebates of up to $500.
"Tax relief is a critical component of a stronger and fairer New Jersey," Murphy said. "With each budget I have introduced, we have provided greater relief to those who need it most, through our continued expansion of the Earned Income Tax Credit, the establishment and expansion of a Child and Dependent Tax Care Credit, increased tax relief for veterans, middle-class tax rebates, and now the long-overdue expansion of the Homestead Benefit to make sure relief reflects reality."
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The key tax relief components include:
--Middle Class Tax Rebate: In Fiscal Year 2022, over 760,000 New Jersey families will receive an up to $500 tax rebate due to the Millionaires Tax enacted by the governor and the Legislature last fall. Families will receive these rebates over the summer. The estimated program cost is $319 million.
--Updating the Homestead Benefit Base Year to 2017: The Fiscal Year 2022 Appropriations Act will update Homestead Benefit payments so that they are based on 2017 property tax information, which is the most recent payment information available, instead of 2006 records. This change is estimated to increase the average benefit for seniors and disabled homeowners by over $130 and the average benefit for lower-income homeowners by $145. The estimated program cost is nearly $80 million.
--Child and Dependent Care Credit (CDCC) Expansion: This budget proposes expanding the CDCC that the governor and Legislature enacted in 2018 so that it is both available for families making up to $150,000 and refundable. This change will benefit over 80,000 more families, and increase the average credit for those making under $30,000 to $277. The estimated cost is $17 million.
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--Extending the Veterans Property Tax Deduction to Peacetime Veterans: The Appropriations Act will support the expanded deduction approved through the 2020 ballot measure. The estimated foregone revenue cost is $15 million.
--Expanding the Earned Income Tax Credit (EITC) Age of Eligibility of 21 to 18 and to Those Over Age 65: The governor and the Legislature aim to provide middle-class tax relief by boosting the EITC from 35% to 40% since 2018. Last year, the governor led on expanding eligibility to an additional 60,000 New Jersey residents by lowering the minimum age from 25 to 21. In Fiscal Year 2022, Governor Murphy and the Legislature will expand eligibility to those 65 and older without dependents and to those as young as 18, which is projected to help another 90,000 residents -- roughly 70,000 over 65; and 20,000 between the ages of 18 and 21. The estimated foregone revenue cost is $13 million.
"This is direct tax relief to middle income families and senior citizens who need it most," Senate President Steve Sweeney said. "The income tax rebate will put money into the pockets of working families so they can support themselves and their children. The increased Homestead rebates will help ease the heavy property tax burden on middle-income homeowners. This extra assistance is especially important for senior citizens on fixed incomes so they can continue to live in their home communities. These benefits will be spent in the local economy, generating jobs and business activity in communities across the state."
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