TRENTON – Legislation sponsored by Senator Shirley K. Turner that would extend income guidelines for the New Jersey Earned Income Tax Credit (EITC) to reflect federal EITC levels received final legislative approval today, passing both houses right before they went into summer recess.
“Hundreds of thousands of working families in New Jersey will see much needed tax relief through the expansion of the EITC,” said Senator Turner, D-Mercer. “This is an area that New Jersey has lagged behind our neighbors for too long and is part of a commitment to reducing poverty in this state.”
Senator Turner noted the measure was the first step in a plan supported by Governor Corzine to provide more poverty relief through the state EITC.
The bill, S-2647, would raise the eligibility threshold for the NJEITC from $20,000 to the federal level. Currently, federal income limits are $32,001 for those with one child ($34,001 if married) and $36,348 for those with more than one child ($38,348 if married). The bill also would extend the credit to individuals with no children earning less than $12,120 and married couples without children earning less than $14,120.
“By doubling the number of EITC recipients with this bill, we are undertaking the single largest anti-poverty effort since we originally adopted the EITC in 2000,” explained Senator Turner.
Those who qualify under the federal guidelines would be eligible to receive an additional 20% of their federal EITC under the New Jersey program. Governor Corzine has announced plans to increase that amount to 22.5% in FY09 and 25% in FY10.
Currently, approximately 250,000 individuals and families receive the state EITC. This bill would double that number to close to 500,000 recipients.
“Unfortunately, America continues to see a widening gap between the haves and the have-nots – a gap we can reduce through the EITC. Anyone who looks to oppose this measure is making it perfectly clear that they support the status quo and consigning our most needy to a life of poverty,” explained Senator Turner.
Individuals and families who qualify for the EITC receive the credit as a refund from the State Treasury when they file their annual income tax returns.
The State Treasurer estimates that the expansion of the EITC program will cost the state in FY08 an additional $28.1 million over the current expenditure of $123 million.
The bill passed the Senate by a vote of 36-0 and the Assembly by a vote of 75-4-1 and now goes to the Governor’s desk for his signature.