HB 16 — AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO TAXES ON PERSONAL INCOME.

Summary

Section 1 of this Act modifies Delaware’s Earned Income Tax Credit (EITC) to allow recipients to choose the most beneficial credit to be applied against their Delaware Personal Income Taxes. Under this Act, recipients can choose between a non-refundable credit of up to 20% of the value of the corresponding federal EITC or a refundable EITC credit of up to 4.5% of the value of the corresponding federal EITC. Section 2 of this Act makes the change to Delaware’s EITC effective for the tax year in which the Secretary of Finance provides the Registrar of Regulations with notice that the personal income tax release of the Integrated Revenue Administration System is implemented. This delay in effective date is necessary to ensure that tax law changes can be properly and efficiently implemented in the Division of Revenue’s modernized Integrated Revenue Administration System, which is currently under development. This Act also makes technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual.

Bill Text

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This bill modifies the Delaware Earned Income Tax Credit by allowing taxpayers to choose between two types of credits against their state taxes.

• § 1117(a)(1)

  An For any tax year beginning before January 1, [of the year in which the contingency under Section 2 of this Act is fulfilled] an individual who is a resident of this State shall be entitled to may receive a nonrefundable credit against the individual’s tax otherwise due under this chapter → For any tax year beginning before January 1, [of the year in which the contingency under Section 2 of this Act is fulfilled], an individual who is a resident of this State may receive a nonrefundable credit against the individual’s tax otherwise due under this chapter

  Clarifies that residents may receive a nonrefundable credit starting before a specific date.

• § 1117(a)(2)

  For any tax year beginning on or after January 1, [of the year in which the contingency under Section 2 of this Act is fulfilled], an individual who is a resident of this State may receive a credit against the individual’s tax under this chapter in an amount based on a percentage of the corresponding federal earned income credit allowed under § 32 or successor provision of the Internal Revenue Code [26 U.S.C. § 32]. The individual may claim either of the following amounts: → For any tax year beginning on or after January 1, [of the year in which the contingency under Section 2 of this Act is fulfilled], an individual who is a resident of this State may receive a credit against the individual’s tax under this chapter in an amount based on a percentage of the corresponding federal earned income credit allowed under § 32 or successor provision of the Internal Revenue Code [26 U.S.C. § 32]. The individual may claim either of the following amounts:

  Maintains the potential for tax credits based on federal earned income credits for residents starting after a specific date.

• § 1117(a)(13)

  20% of the corresponding federal earned income tax credit, not to exceed the tax otherwise due under this chapter. → 20% of the corresponding federal earned income tax credit, not to exceed the tax otherwise due under this chapter.

  Establishes the 20% credit as an option without changes to the limit.

• § 1117(a)(14)

  4.5% of the corresponding federal earned income tax credit, of which the amount that exceeds the tax otherwise due under this chapter is refundable. → 4.5% of the corresponding federal earned income tax credit, of which the amount that exceeds the tax otherwise due under this chapter is refundable.

  Introduces a refundable credit option based on federal earned income credit.

• § 1117(c)

  In no event shall the The credit allowed under subsection (a) paragraph (a)(1) of this section may not exceed the tax otherwise due under this chapter. → The credit allowed under subsection (a) paragraph (a)(1) of this section may not exceed the tax otherwise due under this chapter.

  Clarifies the cap on the credit against tax liabilities.

Action History

1. August 10, 2021

   Signed by Governor

2. June 22, 2021

   Passed By Senate. Votes: 21 YES

3. June 17, 2021

   Reported Out of Committee (Finance) in Senate with 1 Favorable, 3 On Its Merits

4. March 25, 2021

   Assigned to Finance Committee in Senate

5. March 25, 2021

   Passed By House. Votes: 40 YES 1 ABSENT

6. March 19, 2021

   Suspension of Rules in House

7. March 19, 2021

   Suspension of Rules in House

8. March 19, 2021

   Suspension of Rules in House

9. March 17, 2021

   Reported Out of Committee (Appropriations) in House with 3 Favorable, 2 On Its Merits

10. March 11, 2021

    Assigned to Appropriations Committee in House

11. January 26, 2021

    Reported Out of Committee (Revenue & Finance) in House with 11 Favorable, 2 On Its Merits

12. December 04, 2020

    Introduced and Assigned to Revenue & Finance Committee in House

Sponsors

• David P. Sokola · Primary
• Brian Pettyjohn · Primary
• Lyndon D. Yearick · Primary
• Stephanie L. Hansen · Cosponsor
• Marie Pinkney · Cosponsor
• Bryan Townsend · Cosponsor
• John "Jack" Walsh · Cosponsor
• Franklin D. Cooke · Cosponsor
• Ronald E. Gray · Cosponsor
• Krista Griffith · Cosponsor
• Larry Lambert · Cosponsor
• Eric Morrison · Cosponsor
• Edward S. Osienski · Cosponsor
• Michael F. Smith · Cosponsor
• Jeffrey N. Spiegelman · Cosponsor
• Kimberly Williams · Cosponsor
• Madinah Wilson-Anton · Cosponsor
• Valerie Longhurst · Cosponsor
• Sherry Dorsey Walker · Cosponsor
• Ruth Briggs King · Cosponsor
• Gerald L. Brady · Cosponsor
• Andria L. Bennett · Cosponsor
• Sarah McBride · Cosponsor
• Ernesto B Lopez · Cosponsor
• Bruce C. Ennis · Cosponsor
• Michael Ramone · Cosponsor
• Paul S. Baumbach · Primary

Votes

Subjects