Tax Relief

Delaware invoice may present tax breaks for unemployment advantages paid in 2021 | Delaware

(The Center Square) – Delaware residents who received unemployment benefits in the last year may be able to deduct the compensation from their gross income, based on laws running through both houses of the General Assembly.

Earlier this month, State MP Edward Osienski, D-Brookside, introduced himself House bill 285, legislation that would grant tax breaks to Delawareans struggling with unemployment as COVID-19 remained an ongoing challenge.

The bill also includes other components, including a passage that would indemnify employers for fraudulent unemployment claims and set the taxable wage base at $14,500 for 2022.

“During this pandemic, thousands of hard-working Delawareans have lost their jobs through no fault of their own,” Osienski said in one Explanation. “Although many have returned to work or found new jobs, they still struggle with financial hardships that employment brings.”

HB 285, which was formally introduced Jan. 6, has two House bodies — the Working Committee on Jan. 11 and the Appropriations Committee on Jan. 13 — drafting positive recommendations.

The bill was formally voted out of committee and presented to the House of Representatives finished list to an upcoming, as yet undetermined date for a third and final reading.

The loss of tax revenue will be borne by the state government, and Delaware officials have begun collating the numbers ahead of the final vote.

“The Treasury Department estimates that the exemption from state taxation of calendar year 2021 unemployment benefits (approximately $466 million paid in 2021) resulted in an overall loss of fund revenue of $18.9 million in the current fiscal year and June 6, 2021 $.3 million in fiscal 2023.” Robert Scoglietti, Office of the Comptroller General, wrote in a tax note.

Osienski’s legislation has garnered support elsewhere in the General Assembly, as well as at the executive level.

State Sen. Jack Walsh, D-Stanton, is listed as an additional sponsor of the legislation. In the press release, Walsh noted that last year the General Assembly allocated approximately $25 million in collective tax breaks to Delaware families and businesses negatively impacted by COVID-19.

“As we enter our third year of this public health emergency, we owe it to Delawareans and the small businesses that are the backbone of our economy to continue these tax breaks for at least another year,” Walsh said.

Gov. John Carney, whose signature would be required to pass the bill, said he supports the tax breaks continuing once the bill lands on his desk.

“Delaware families have been through a lot in the last two years,” Carney said. “And while we’ve significantly expanded unemployment benefits to support Delaware workers and families who have been hardest hit by the COVID-19 crisis, we should not then turn around and tax workers on that income.”

According to the Delaware Division of Unemployment Insurance, more than 185,000 claims have been filed by state residents in the past two fiscal years.

The department reportedly paid out a total of $1.5 billion in unemployment benefits from March 2020 to December 2021. During 2019, $67 million in unemployment benefits were paid out nationwide.

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