In December, Governor Phil Murphy took a giant step in supporting working families by signing S4065/A6071, the child and dependent care tax credit! The bill, passed unanimously on Thursday in both the Senate and the Assembly, will significantly increase access to the state tax credit for child care and increase the total amount of allowable credit for families.
This increase in eligibility more than doubles the existing salary cap from $60,000 to $150,000, and will allow for approximately 80,000 additional families to benefit from the law. As the tax credit will now be refundable, it will allow families to receive the monetary difference, should the tax credit be higher than families’ tax bills. The credit will also be based on a percentage of the federal tax credit, which currently has been increased for one year. That means that this year, families will benefit from both a federal and state tax credit.
This law is particularly important for working mothers, many of whom needed to leave the workforce due to access to and the cost of child care. Inadequate access and the cost of child care has been a big barrier for working mothers’ ability to return to the workforce.
This is all good news for working families, who need to return to work as well as businesses and the overall child care system, that need employees to return to work but continue to financially struggle due to the current staffing crisis.