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Delawareans who lost their job during the COVID-19 pandemic may not have to pay state taxes on unemployment.

State lawmakers unveiled a proposal Monday that has Governor Carney's backing that would exempt unemployment benefits paid in 2020 from Delaware state income tax and would also waive the waiting period for extended benefits.

House Bill 65 would also maintain the new employer tax rates at 2020 levels, or 1.8%, benefitting as many as 2,000 businesses. The measure would save employers up to $264 per employee in 2021, legislators said.

During the pandemic, a record number of Delawareans -- more than 100,00 filed for unemployment with the state Division of Unemployment Insurance paying more than $965 million in benefits in 2020 compared to just $67 million in 2019.

Governor Carney said he'll ensure this bill is a priority when the legislative session begins Tuesday, January 12, 2021.

“In the past year, we have significantly expanded unemployment benefits to support Delaware workers and families who have been hit hardest by the COVID-19 crisis. We shouldn’t then turn around and tax workers on that income,” said Governor Carney in a prepared statement. 

The state would lose $21 million in tax money on unemployment benefits, if the measure passes.

The measure's lead sponsor in the House, Rep. Ed Osienski (D-Brookside) said the state owes this to the workers impacted by the pandemic.

"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, and we’re also taking steps to protect businesses so they aren’t penalized with higher taxes during the pandemic.”