Delaware Governor Announces Tax Relief Package

State of Delaware

DELAWARE — Delaware Governor John Carney on Monday announced that House Bill 89, sponsored by Representative Paul Baumbach and Senate Pro Tem Dave Sokola, was introduced in the House of Representatives. House Bill 89 increases the standard deduction for personal income taxes by 75 percent in Tax Year 2024, and increases the refundable Earned Income Tax Credit (EITC) to 7.5 percent of the federal credit for Tax Year 2023. The legislation also adjusts the income thresholds for personal income tax to adjust for these increases. Governor Carney announced this tax relief package at his Fiscal Year 2024 recommended budget earlier this year.

“Increasing the standard deduction as well as the Earned Income Tax Credit will help thousands of working families in Delaware lift take-home pay — and help pay for child care, education, medical bills, and other expenses that we know can grow each year,” said Governor Carney. “This legislation will help working Delaware families, and provide a real benefit for the middle class. We are pleased to partner with Representative Baumbach and Senator Sokola on this legislation, and we hope that all members of the General Assembly will join us in making this a priority.”

Under House Bill 89, the Standard Deduction would increase by 75 percent to $5,700 for an individual ($11,400 for a couple), effective Tax Year 2024. Additionally, the 7.5 percent increase to the EITC would enable nearly 20,000 tax filers to have net liability reduced to $0, or receive EITC refunds.

“I was very excited when Governor Carney announced these two tax provisions in his 2024 budget. Taken together, these changes will put more money in the pockets of working Delawareans at a time they most need this assistance,” said Representative Paul Baumbach, the lead sponsor of House Bill 89. “The standard deduction increase is designed to catch up to years of inflation and will provide welcome relief to many middle-income Delaware families. It will also simplify the tax reporting for many families. I spent several years leading efforts to introduce a refundable Earned Income Tax Credit program to Delaware. As such, I am especially delighted that the Governor is leading efforts to expand this, directing critical support to Delaware’s working families most in need of support. For these reasons, I am very excited to be joining Senator Sokola and many other caucus leaders in prime-sponsoring this legislation to implement the Governor’s recommended tax changes.”

READ:  2022 Year-End Data Released by Delaware Department of Insurance

“For nearly as long as he has served in the legislature, Representative Baumbach has been a leading proponent of expanding the EITC for Delaware’s working families,” said Senate President Pro Tempore Dave Sokola. “House Bill 89 builds on our legislation (HB 16) from the last General Assembly, which is why I am proud to serve alongside him as the Senate prime sponsor of this legislation.”

“The middle class is the backbone of our economy. Increasing the standard deduction and EITC is common sense policy. I’m proud to support HB 89, ” said Lt. Governor Bethany Hall-Long. “This legislation would help ease the tax burden on many hard-working families in Delaware. Thank you to Governor Carney, Representative Baumbach, and Senator Sokola for their leadership on this issue. It is an important step in making Delaware an even better place to live and work.”

The Delaware Department of Finance expects House Bill 89 to incentivize work and simplify tax preparation for 370,000 tax filers. The Department estimates that almost 50,000 tax filers could switch to standard deduction. More than 80 percent of residents that would benefit from this tax relief package have a Delaware Adjusted Gross Income below $75,000.

The federal Earned Income Tax Credit is a tax credit that reduces the amount of federal income tax a person owes, and is refundable if the tax-filer’s credit is larger than what they owe in taxes. EITC is described as the nation’s most effective anti-poverty program for working families. The federal EITC was introduced in 1975 and was designed to offset federal income taxes and social security payroll taxes while rewarding work.

READ:  Say Goodbye to Hydrilla: Delaware Takes Action to Protect Waterways

For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News.