Estimates only · Not tax advice · Results are illustrative and should be reviewed with a qualified tax advisor.
Federal tax on 2026 MFJ brackets · NJ Gross Income Tax on 2026 MFJ brackets (1.4%–10.75%) · NJ Corporation Business Tax at 6.5% / 7.5% / 9% by income tier plus the 2.5% Corporate Transit Fee above $10M · Assumes half of childcare spend is exempt from payroll tax under IRC §129; actual treatment varies by plan structure and employee elections · The calculator automatically picks the federal §45F credit or the full deduction, whichever saves more.
New Jersey notes: NJ has no enacted employer childcare credit — S1837 (50% of spend, $100K cap) is pending in the Legislature and is not included here. When the federal §45F credit is claimed, IRC §45F(f)(1) disallows a deduction for the credited amount. NJ does not permit an additional deduction for federally disallowed expenses — for CBT, S-Corps or partnerships (the Division of Taxation's stated position on the Employee Retention Credit) — so the same reduced basis is used for NJ Gross Income Tax and CBT. Newark and Jersey City employer payroll taxes (1%) are not modeled.
Owners: Business owners are eligible for the §45F federal credit on their own childcare but not the deduction — company-level deductions are picked up as income on the owner's personal return and net to zero. Deduction savings apply to employee childcare only. The §129 payroll tax exemption may not apply to owners if the plan fails IRC §129 non-discrimination testing.