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Delaware Senate Democrats

Senate Passes Tax Relief For Retired Military, First Responders

March 15, 2022

DOVER – The State Senate on Tuesday unanimously passed two bills that together will provide tax relief to thousands of retired service members and first responders living in Delaware.

Sponsored in January by Sen. Spiros Mantzavinos, Senate Substitute 1 for Senate Bill 188 would exclude up to $12,500 worth of military pension income from state tax calculations for all retired service members, regardless of age, starting in 2023.

“Our nation’s retired service members, each of whom bravely and dutifully served this country for 20 years or more, deserve more than just our words of gratitude and appreciation,” said Sen. Mantzavinos, D-Elsmere. “They deserve a state tax system that respects their sacrifice and gives them the breathing room they need to survive on the retirement benefits they earned through their service to this nation. By increasing the tax exclusion for retired service members, this legislation also will offer those leaving military services in their 30s and 40s an incentive to begin a second career in Delaware.”

Currently, 26 states that tax personal income completely exclude military pensions from their taxable income calculations. Nine others, including Delaware, offer partial tax exemptions. 

Under current state tax law, a $12,500 pension exclusion is only available to residents over the age of 60, while younger retirees – including retired service members – are only eligible for a $2,000 pension exclusion.

“We must always be sure to appreciate our armed forces and show them a debt of gratitude,” said Rep. Nnamdi Chukwuocha, the House prime sponsor of SS1 for SB 188. “We can never fully repay the sacrifices made by our brave men and women in uniform, but this is one gesture we can make to show our appreciation for their service.”

The Delaware Senate on Tuesday also passed legislation to double the state tax credit available to active members of volunteer fire, ambulance, and rescue service companies.

Sponsored in June by Sen. Bruce Ennis, Senate Bill 189 would increase the credit against the income tax liability available to resident first responders from $500 to $1,000 – an adjustment recommended by Volunteer Firefighter Recruitment and Retention Task Force.

“The volunteer fire companies that have protected Delawareans for generations have seen a dramatic decline in members in recent years,” said Sen. Ennis, D-Smyrna. “If we are going to continue asking Delawareans to put their safety on the line for their communities, the least we can do is help provide them with reasonable incentives as a sign of our gratitude and appreciation.”

SB 189 is the second measure recommended by the task force to pass the Senate. Signed by Governor John Carney in September, House Bill 249 created a tuition reimbursement program for volunteer firefighters, similar to previously existing programs for police officers and National Guard members.

“The brave men and women in our state’s volunteer fire, ambulance and rescue service companies risk their lives to serve their fellow community members every day, often using their own resources in the process,” said Rep. Larry Mitchell, the House prime sponsor of SB 189. “Additionally, by providing these life-saving services at no expense, our volunteer first responders save Delawareans hundreds of millions of dollars in taxes every year. This tax credit is just a small way to give back to those who give so much without asking for anything in return.”

Both SS 1 for SB 183 and SB 189 now head to the Delaware House of Representatives for final consideration.