Some Parents in This State Could Get a $500 Tax Credit Each Year
- The boosted Child Tax Credit has not been available to families in 2022.
- Now, one state is trying to compensate by making funds available to lower earners.
Will you be one of them?
Last year, when unemployment was high, many families found themselves struggling financially -- especially those that were forced to deplete their savings to get through the first part of the COVID-19 crisis. Thankfully, aid was made available to the public in the form of not just stimulus checks, but also, a boosted Child Tax Credit.
Last year, under the boosted Child Tax Credit, families could receive up to $3,600 per child under the age of 6, and up to $3,000 per child aged 6 to 17. By contrast, this year, the Child Tax Credit maxes out at $2,000 per child.
Another great feature of the boosted Child Tax Credit was that it paid parents monthly last year from July through December. Those payments only represented half of the credit's total value, but getting that money in monthly installments was a lifeline for struggling families.
Meanwhile, although lawmakers haven't given up on the boosted Child Tax Credit, right now, it's off the table for 2022. But one state is taking action to provide similar aid to families with children.
Residents of one state could be getting a payday
New Jersey is often regarded as one of the most expensive states in the U.S. That's largely due to factors like high home prices and property taxes. But many families can't easily abandon the Garden State -- not when they have ties to their communities and, in some cases, are tethered to a job in large nearby cities like Philadelphia and New York.
Governor Phil Murphy says he wants to provide relief to families in New Jersey who are having a hard time keeping up with rising living costs. To that end, he recently signed a law creating a child tax credit program for low- and middle-income households. Under the program, those who earn $80,000 or less and who file a New Jersey state income tax return will be eligible for relief.
Specifically, the new child tax credit will be worth:
- $500 for households earning $30,000 a year or less
- $400 for households earning more than $30,000 a year but less than $40,000
- $300 for households earning more than $40,000 a year but less than $50,000
- $200 for households earning more than $50,000 a year but less than $60,000
- $100 for households earning more than $60,000 a year but less than $80,000
Limited relief for some
While New Jersey's new child tax credit is a good step toward providing financial relief for families that need it, the reality is that it may end up falling short for many -- particularly those who are entitled to a mere $100 credit, which, these days, won't go very far toward paying bills.
In fact, some lawmakers criticized the new tax credit not only because of its limited impact, but also, because of its timing. That's because parents won't be able to apply for the credit until they file their 2023 taxes in the spring of 2024. So all told, the first payment under the new credit may not arrive for almost two years.
Of course, it's easy to argue that some aid for families is better than none. But in a state like New Jersey where it's possible for a modest home's property tax bill to increase by $1,000 from one year to the next, a $100 credit, or even a $500 credit, doesn't seem like much.
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