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HB 285 to extend COVID tax relief for Businesses and Unemployed

Senator Jack Walsh and Representative Ed Osienski have introduced House Bill 285, which would exempt unemployment benefits paid in 2021 from state income taxes, maintain the new employer tax rates at 2020 levels, and reduce the unemployment tax assessment rate for merit-rated employers to the lowest of their earned rates for 2020, 2021 and 2022.

A record number of Delawareans have filed for unemployment during the pandemic. The state Division of Unemployment Insurance processed more 185,000 claims each of the past two fiscal years, nearly six times the claims received and processed in 2019. Since March 2020 through December 2021, the division paid 107,195 people more than $1.5 billion in UI benefits, compared to about $67 million in 2019.

Federal pandemic benefits expired in September, reducing the assistance being provided to these families.

HB 285 also would hold the taxable wage base at $14,500 for 2022, which would reduce the amount of wages on which employers pay unemployment tax assessments into the UI Trust Fund for 2022. It 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 initially granted this authority in 2021, but it is slated to expire at the end of March. HB 285 would extend this authority until December 2022.

House Bill 285 SponsorsYes VotesNo Votes
Osienski, K.Williams, Brady, Lambert, Longhurst, Matthews, Mitchell, Morrison, Wilson-Anton, M.Smith, Ramone
Walsh, Poore, Gay, McBride, Townsend
Current Status: House Labor Committee as of 1/7/22

Rep. Osienski: “During this pandemic, thousands of hard-working Delawareans lost their jobs through no fault of their own. Although many have returned to work or found new jobs, they are still struggling with the financial difficulties brought on by being unemployed. We owe it to those impacted by the pandemic to take whatever action we can to ease their burden. 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.”

“We also have numerous businesses that already have faced monumental challenges during the pandemic, so we want to be sure they aren’t penalized with higher taxes or facing even more difficulties related to unemployment claims. This bill will protect both residents and businesses as we continue to navigate this ongoing pandemic and its lingering effects.”

Sen. Walsh: “The Delaware General Assembly last year provided roughly $25 million in tax relief to Delaware families and businesses whose livelihoods have been negatively impacted by the pandemic. As we enter our third year of this of this public health emergency, we owe it to those Delawareans and the small businesses that make up the backbone of our economy to continue that tax relief for at least another year.”

Governor John Carney: “Delaware families have been through a lot over the past two years. And while 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. This legislation will help support working Delaware families as well as businesses impacted by COVID-19. Thank you to all the members of the General Assembly making this a priority for legislative session.”

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