Delaware Vote Tracker

HB65 – Tax Exempt Unemployment Benefits

House Bill 65 is an immediate COVID 19 relief bill that can help Delawareans impacted by the Pandemic.

During the past year, a record number of Delawareans – more than 100,000 – filed for unemployment, with the state Division of Unemployment Insurance paying benefits of more than $965 million in 2020, compared to about $67 million in 2019. Although the unemployment rate has fallen in recent months, thousands of residents are still unable to secure a job during the ongoing crisis. Although Congress recently extended benefits from the CARES Act, officials have been exploring ways to assist people locally. 

The bill would exempt unemployment benefits paid in 2020 from Delaware state income tax, maintain the new employer tax rates at 2020 levels, and waive the 13-week waiting period before the state could trigger on extended benefits. Exempting unemployment benefits from state taxes would keep $21 million in the bank accounts of the more than 100,000 Delawareans who filed for unemployment last year.  Maintaining the new employer tax rates at 2020 rates is expected to benefit more than 2,000 businesses. Holding the new employer tax rate at 1.8% will save employers up to $264 per employee in 2021. Holding the new construction employer tax rate at 2.3% will save employers up to $165 per employee in 2021, according to the Division of Unemployment Insurance. 

HB 65 SponsorsYes VotesNo Votes
Osienski, Bush, K.Williams, Schwartzkopf, Longhurst, Mitchell, Matthews, Baumbach, Bennett, Heffernan, Morrison, K.Johnson, Cooke, Wilson-Anton, Briggs King, Carson, Dorsey Walker, Kowalko, M. Smith
Walsh, Paradee, Poore, Townsend, Brown, S.McBride, Hansen, Sokola, Wilson
Current Status – Out of Committee as of 1/13/21. Ready for a vote

HB 65 also would extend the Department of Labor secretary’s ability to issue emergency rules amending the Delaware Unemployment Insurance Code to deal with the effects of COVID-19 and implement federal programs providing unemployment benefits to respond to COVID-19. The General Assembly granted this authority, but it is slated to expire at the end of March. HB 65 would extend this authority until March 2022. 

“Thousands of hard-working Delawareans have lost their jobs during the past year through no fault of their own. We owe it to those impacted by the pandemic to take whatever action we can to ease their burden,” said Rep. Ed Osienski, 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, and we’re also taking steps to protect businesses so they aren’t penalized with higher taxes during the pandemic.” 

“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 John Carney (D). “That’s why I’m pleased to make this bill a priority when we return to legislative session this month. Thank you to members of the General Assembly for their partnership in supporting working Delaware families.” 

“Delaware’s unemployment insurance program is one of our main tools we have for helping workers affected by the COVID-19 pandemic keep food on the table and a roof over their heads,” said Sen. Jack Walsh, the lead Senate sponsor of the bill. “Taxing that income now would undo the very benefit we are seeking to provide them. At the same time, we need to make sure our local businesses are not facing an additional tax burden as a result of these unemployment claims. We need to pass this legislation today for our local economy and the working families of this state.” 

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