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Delaware Senate Democrats

Senate Passes Unemployment Tax Relief Legislation

January 28, 2022

DOVER – The Delaware State Senate on Thursday unanimously passed legislation to provide tax relief to small businesses and tens of thousands of Delawareans forced out of work by the COVID-19 pandemic.

House Bill 65, which passed the House unanimously one week earlier, will now head to the governor for his signature.

“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-Stanton, 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 bill is expected to save Delawareans roughly $21 million this year by subtracting all unemployment benefits received in calendar year 2020 from federal adjusted gross income, which is used to calculate state personal income taxes.

More than 100,000 Delawareans filed for unemployment benefits last year and will qualify for the exemption. Although the unemployment rate has fallen in recent months, thousands of residents are still unable to secure a job during the ongoing crisis.

“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-Brookside, 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.”

The bill also provides tax relief to employers by freezing employer assessment rates at 2020 levels. According to the Division of Unemployment Insurance, thousands of businesses will benefit from the freeze. Those paying the new employer tax rate of 1.8% will save an estimated $264 per employee in 2021.