Division of TaxationWe understand the enormous financial strain child care costs can place on working families. The Child and Dependent Care Credit provides relief for such costs.
Eligible resident taxpayers who are allowed a federal credit for expenses they incur for the care of one or more qualifying individuals are eligible for a credit against their Ó£»¨ÊÓƵ 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.
Beginning with Tax Year 2021, amendments to the law were made to help benefit even more Ó£»¨ÊÓƵans. The taxable income threshold has increased to $150,000, there is no longer a maximum credit limitation, the credit percentage increased for thousands of taxpayers, and eligible claimants can receive a refund of the credit after any tax is paid.
Information on how to claim the 2024 Child and Dependent Care Credit can be found on page 43 of the NJ-1040 Instructions .
The credit will reduce the amount of Ó£»¨ÊÓƵ Gross Income Tax a taxpayer owes, and may result in a refund if no taxes are owed. Taxpayers may be able to claim the Ó£»¨ÊÓƵ Child and Dependent Care Credit if they:
The amount of the Ó£»¨ÊÓƵ credit is a percentage of the taxpayer's federal child and dependent care credit and varies according to the amount of the taxpayer's Ó£»¨ÊÓƵ taxable income.
Applicable Laws and Rules
(P.L. 2018, c.45)
| If NJ taxable income is: | Amount of the NJ credit is: |
|---|---|
| Not over $30,000 | 50% of federal credit |
| over $30,000 but not over $60,000 | 40% of federal credit |
| over $60,000 but not over $90,000 | 30% of federal credit |
| over $90,000 but not over $120,000 | 20% of federal credit |
| over $120,000 but not over $150,000 | 10% of federal credit |
Information on how to claim the 2020 Child and Dependent Care Credit can be found on page 34 of the 2020 NJ-1040 Instructions.
The credit will reduce the amount of Ó£»¨ÊÓƵ 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 Ó£»¨ÊÓƵ Child and Dependent Care Credit if they:
| 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 Ó£»¨ÊÓƵ credit cannot exceed $500 for one qualifying individual or $1,000 for two or more qualifying individuals.