Eligible New Jersey families with young children would receive a larger state child tax credit for the next three years under legislation included in the fiscal year 2027 state budget package, according to a text of the legislation obtained by TLS.

The measure would temporarily increase the value of the refundable tax credit for families earning up to $80,000 annually with children younger than age 6, beginning with tax year 2026 and continuing through tax year 2028.

Under current law, eligible families receive a credit ranging from $200 to $1,000 per qualifying child, depending on household income. The budget bill would raise those amounts by 25% during the three-year period before the credit reverts to current levels beginning in tax year 2029.

Families with annual taxable income of $30,000 or less would see the maximum credit increase from $1,000 to $1,250 per child. Those earning between $30,001 and $40,000 would receive up to $1,000, an increase from the current $800 credit.

The proposal would also increase the credit for other eligible income brackets. Families earning between $40,001 and $50,000 would receive $750 instead of $600, those earning between $50,001 and $60,000 would receive $500 instead of $400, and families earning between $60,001 and $80,000 would receive $250 instead of $200.

The income eligibility threshold of $80,000 would remain unchanged.

The child tax credit, first enacted in 2022 and later expanded, is available to New Jersey residents who claim a qualifying child under age 6 on their state income tax return. The credit is refundable, meaning eligible taxpayers can receive the full amount even if it exceeds their state income tax liability.

The legislation would not change other provisions governing the credit. Married taxpayers generally would still be required to file jointly to qualify, with exceptions for heads of household and surviving spouses. Taxpayers using either a Social Security number or an Individual Taxpayer Identification Number would continue to be eligible.

Under the proposal, the temporary increases would apply to taxable years beginning on or after January 1, 2026, and expire after tax year 2028 unless extended by lawmakers.

Supporters have said increasing the credit is intended to provide additional financial relief to lower- and moderate-income families facing the rising costs of raising young children. Because the measure is part of the fiscal year 2027 budget package, it is expected to take effect immediately upon enactment.