HB65 taxes carney unemployment

If you received unemployment benefits during the pandemic, you no longer need to report that as income on your state taxes, thanks to a bill signed into law by Gov. John Carney Monday. 

"To give people a little perspective, in the first four weeks after the State of Emergency was called, we received 62,000 claims for unemployment benefits. We received 32,000 in 2019. Before the end of 2020, we received 175,000 claims for unemployment benefits," said Director for the Division of Unemployment Insurance Darryl Scott. "So, truly unprecedented for the workers of the state of Delaware, and the impact this pandemic has had on our families and friends and neighbors in the state. To give you a little more perspective, in 2019 we paid $63 million in benefits and we approached a billion dollars in 2020. So, the legislation that's before us, I think, provides real financial assistance at a time when families are continuing to struggle to manage through this pandemic."

House Bill 65 passed through the General Assembly at the tail-end of January, and subtracts "all unemployment benefits received in calendar year 2020 from federal adjusted gross income," used to calculate personal income taxes.

"This is tax time, here in our state and across the country, and this tax relief comes at a really important time," said Carney. "Just to to re-emphasize our focus--which has been, since the beginning, to protect workers as they as they experience unemployment, the loss of a job, hopefully just for a short period of time, as well as support for all our businesses, particularly small businesses through this pandemic--we've utilized almost a billion dollars of resources that we receive, through CARES Act funding from the federal government to support our small businesses and workers across their state. This bill, House Bill 65, will enable us to continue with that support at a time that's needed."

The legislation is expected to save Delawareans--more than 100,000 of whom filed for benefits in the past year during a global pandemic--more than $21 million this tax season. 

"Back in December when we did our review, we realized that 100,000 Delawareans who could not withhold Delaware tax from their weekly benefits, would be receiving a tax bill for all the 2020 benefits they received due to the loss of their jobs from the pandemic," said state Rep. Ed Osienski (D). "So the Council unanimously supported the legislation. Exempting unemployment benefits from the state taxes would keep approximately $21 million in the hands of more than the 100,000 Delawareans who filed for unemployment last year, allowing them additional money to pay for their rent, utilities, and buy groceries."

The bill also freezes employer assessment rates at 2020 levels, providing thousands of businesses tax relief.