NJ to extend earned income tax credit to more young adults
TRENTON — Tens of thousands of young adults in New Jersey will become eligible for the earned income tax credit under a bill due to be approved Thursday as part of the new state budget.
The EITC is a refundable tax credit paid to low- and middle-income working people since 1975 at the federal level and since 2000 in New Jersey. In the coming year, New Jersey’s credit will equal 40% of the federal one.
Vineeta Kapahi, a policy analyst for New Jersey Policy Perspective said far too many people who need the help aren’t eligible for the earned income tax credit, in part because it starts at age 25 for people without children.
“That eligibility criteria is based on the assumption that workers who are under 25 are dependent on their families, but the reality is that many New Jersey workers are financially independent or even support their families,” Kapahi said.
Legislative budget analysts project that around 57,800 income-tax filers may become newly eligible to claim the tax credit.
Renee Koubiadis, executive director of the Anti-Poverty Network of New Jersey, said the change could help young adults who struggle to afford to move out of their parents’ home – which is more common in New Jersey than any other state.
“In addition, in the last five to 10 years, it’s become clear that more and more college students at both two- and four-year institutions who are under the age of 25 are struggling with low wages, plus housing and food insecurity, across the state,” Koubiadis said.
Koubiadis said research shows people spend their tax credits immediately and in their community, which would help the local economy.
The bill was unanimously endorsed by the 25 members of the Senate and Assembly budget committees Tuesday.
People without dependent children qualify for the credit between ages 25 and 65. State Sen. Sam Thompson, R-Middlesex, said the upper age limit should be erased as well.
“I mean whatever the lower is, from that age up. Why should we say at 66, you no longer qualify?” Thompson said.
Lawmakers proposed moving the lower limit to age 18, but Gov. Phil Murphy wanted it set at 21 so the bill was amended.
Twenty-year-old Yeimi Hernandez of Freehold, who works as a receptionist at a law firm to help support her family, welcomes the change.
“As I file taxes on my own this coming year, I know that especially under a pandemic, when so many have lost their jobs, extending EITC is especially important,” said Hernandez, a youth member of the immigrant advocacy group Make the Road New Jersey.
More From Townsquare Media News: