Bill Text: NJ S3633 | 2018-2019 | Regular Session | Introduced
Bill Title: Allows gross income tax credit for residential rent paid in excess of 30 percent of gross income.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2019-05-13 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S3633 Detail]
Download: New_Jersey-2018-S3633-Introduced.html
Sponsored by:
Senator TROY SINGLETON
District 7 (Burlington)
Senator RONALD L. RICE
District 28 (Essex)
SYNOPSIS
Allows gross income tax credit for residential rent paid in excess of 30 percent of gross income.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing a gross income tax credit for certain residential rent paid, supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A taxpayer whose principal residence is a rental unit in the State, and who pays rent for that unit in excess of 30 percent of the taxpayer's gross income in the taxable year, shall be allowed a credit against the tax otherwise due pursuant to the "New Jersey Gross Income Tax Act," (N.J.S.54A:1-1 et seq.) in an amount equal to the applicable percentage of such excess.
The applicable percentage shall be determined as follows:
if gross income is $25,000 or less, the applicable percentage is 100 percent;
if gross income is over $25,000 but not over $50,000, the applicable percentage is 75 percent;
if gross income is over $50,000 but not over $75,000, the applicable percentage is 50 percent;
if gross income is over $75,000 but not over $100,000, the applicable percentage is 25 percent.
If the credit allowed reduces the tax liability otherwise due to zero, any amount of the credit remaining shall be paid to the taxpayer as a refund of an overpayment of tax pursuant to N.J.S.54A:9-7, provided however, subsection (f) of that section, concerning the allowance of interest, shall not apply.
For purposes of calculating the credit, the amount that a taxpayer pays in rent shall not include a Federal or State voucher or subsidy, but shall include the essential utilities of water, gas, and electric.
b. A taxpayer shall not be allowed a credit if the taxpayer's rent is in excess of 125 percent of the fair market rent, as most recently published by the federal Department of Housing and Urban Development.
c. Married taxpayers shall file a joint return in order to claim the credit provided by this section.
d. The order of priority of the application of the credit allowed pursuant to this section and any other credits allowed against the gross income tax for a taxable year shall be as prescribed by the director.
2. Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the director may adopt immediately upon filing with the Office of Administrative Law such regulations as the director deems necessary to implement the provisions of this act, which shall be effective for a period not to exceed 180 days following the date of enactment of P.L. , c. (C. ) (pending before the Legislature as this bill) and may thereafter be amended, adopted, or readopted by the director in accordance with the requirements of P.L.1968, c.410 (C.52:14B-1 et seq.).
3. This act shall take effect immediately and apply to taxable years beginning January 1 next following enactment.
STATEMENT
This bill allows taxpayers a refundable income tax credit for a percentage of the amount they paid for rent that is in excess of 30 percent of their income.
Pursuant to the bill, if a taxpayer's gross income is any amount up to $25,000, the taxpayer is eligible for a credit that is equal to the full amount the taxpayer paid for rent during the year that is in excess of 30 percent of the taxpayer's income. For every $25,000 of income, the credit is reduced by 25 percent. For example, if a taxpayer's gross income is $60,000 the taxpayer is eligible for a credit equal to 50 percent of the amount of rent the taxpayer paid in excess of $18,000. If the taxpayer in this example paid $21,000 for rent in the year, the credit would be $1,500. (30% of 60,000 is 18,000; the amount paid in excess of 18,000 is 3,000; and 50% of 3,000 is 1,500)
"Rent" paid by the taxpayer includes amounts paid for water, gas, and electric, but does not include government vouchers or subsidies that are used to pay for rent.
A taxpayer is not eligible for the credit if the amount the taxpayer pays in rent is more than 125 percent of the federally determined fair market rent for that area. This restriction helps prevent taxpayers from renting at prices that are higher than what they would pay if the State did not allow the credit.
The credit is refundable, meaning that the amount of credit that is more than what is owed in income tax will be paid by the State to the taxpayer.
