Governor John Carney will now have the opportunity to sign into law legislation that would remove unemployment benefits from taxable income, after the state Senate approved House Bill 65 Thursday.
The bill, which was approved in the state House a week prior, subtracts "all unemployment benefits received in calendar year 2020 from federal adjusted gross income," used to calculate personal income taxes. It's expected to save Delawareans roughly $21 million this year.
"This pandemic has pushed countless Delaware families to the brink and we need to do everything we can to help them keep food on the table and a roof over their heads," said Sen. Jack Walsh (D), the lead Senate sponsor of HB 65. "The tax relief provided in this bill is straightforward and effective. It will keep money in the pockets of those who need it most. I’m glad we could get it drafted and passed in short order to start the year, especially with tax deadlines rapidly approaching, and I am happy to see it pass unanimously in both chambers."
The state saw more than 100,000 individuals file for benefits in 2020. The bill also freezes employer assessment rates at 2020 levels, providing thousands of businesses tax relief, according to the Division of Unemployment Insurance.
"Thousands of hard-working Delawareans have lost their jobs during the past year through no fault of their own, putting them in a difficult position at one of the worst times possible. We owe it to those impacted by the pandemic to take whatever action we can to ease their burden," said Rep. Ed Osienski (D) the lead sponsor of the bill. "Exempting the unemployment benefits that have been a lifeline to so many families will mean that they aren’t blindsided when they file their state taxes this year, keeping a little more money in their pockets. We’re also taking steps to protect businesses so they aren’t penalized with higher taxes during the pandemic, which hopefully will help them keep their doors open."