New legislation signed into law on July 1, 2018, made several changes to the New Jersey Gross Income Tax Act at N.J.S.A. 54A:1-1 et seq. as part of New Jersey’s fiscal year 2019 budget. The changes include increases in the New Jersey Earned Income Tax Credit (EITC) and the property tax deduction, and the addition of a new Child and Dependent Care Credit for resident taxpayers. The law also increased the income tax rate for incomes over $5,000,000. These changes affect the returns that taxpayers will file beginning in tax year 2018.
Earned Income Tax Credit: Currently, qualified taxpayers are eligible for a New Jersey EITC equal to 35% of their federal earned income credit. The new law increases the percentage as follows: 37% in tax year 2018; 39% in tax year 2019; and40% in tax year 2020 and thereafter.