House Passes Bill that Increases the Standard Tax Deduction

The House unanimously passed a measure Tuesday that would provide tax relief to tens of thousands of working-class Delaware families by increasing the standard deduction on state taxes and boosting the refundable Earned Income Tax Credit.

Sponsored by Rep. Paul Baumbach, House Bill 89 would increase the standard deduction for personal income taxes by 75% in tax year 2024 and increase the refundable Earned Income Tax Credit (EITC) to 7.5% of the federal credit for tax year 2023.

Under HB 89, the standard deduction would increase to $5,700 for an individual ($11,400 for a couple). Additionally, the 7.5% increase to the EITC would enable nearly 20,000 tax filers to have net liability reduced to $0, or receive EITC refunds.

Governor John Carney announced this tax relief package his fiscal 2024 recommended budget earlier this year.

The Delaware Department of Finance expects HB 89 to incentivize work and simplify tax preparation for 370,000 tax filers. The department estimates that almost 50,000 tax filers could switch to standard deduction. More than 80% of residents that would benefit from this tax relief package have a Delaware Adjusted Gross Income below $75,000.

This bill is now in the Senate Executive Committee for consideration.

House Bill 89 – Increase of the Standard Tax Deduction	Currrent Status – House Passed 39-0-2. Senate Executive 4/4/23
House Sponsors – Baumbach, Schwartzkopf, Longhurst, Minor-Brown, Bolden, Chukwuocha, Dorsey Waler, Griffith, Johnson, Williams // Smith	Senate Sponsors – Sokola, Townsend, Lockman, Hansen, Huxtable // Hocker
House Yes Votes – Baumbach Bolden Bush Carson Chukwuocha Cooke Dorsey-Walker Griffith Harris Heffernan Johnson Lambert Longhurst Matthews Minor-Brown Moore Morrison Neal Osienski Phillips Romer Schwartzkopf Williams Wilson-Anton // Briggs King Collins Dukes Gray Hensley Hilovsky Morris Postles Ramone Short Shupe Smith Spiegelman Vanderwende Yearick	Senate Yes Votes –
House No Votes – None	Senate No Votes –
House Absents or Not Voting – Lynn, Parker Selby	Senate Absent or Not Voting –

“Taken together, these changes will put more money in the pockets of working Delawareans at a time they most need this assistance,” said Rep. Baumbach. “The standard deduction increase is designed to catch up to years of inflation and will provide welcome relief to many middle-income Delaware families. It will also simplify the tax reporting for many families. I have spent several years leading efforts to introduce a refundable Earned Income Tax Credit program to Delaware, and I’m thrilled that we are taking steps to increase that funding now, directing critical support to Delaware’s working families most in need of support.”

“For nearly as long as he has served in the legislature, Representative Baumbach has been a leading proponent of expanding the EITC for Delaware’s working families,” said Senate President Pro Tempore Dave Sokola, the lead Senate sponsor for HB 89. “House Bill 89 builds on our legislation (HB 16) from the last General Assembly, which is why I am proud to serve alongside him as the Senate prime sponsor of this legislation.”