House passes standard deduction, Earned Income Tax Credit relief bill


The House overwhelmingly passed a measure Tuesday that would provide tax relief to Delaware families by increasing the standard deduction on state taxes and boosting the refundable Earned Income Tax Credit.

All representatives voted for the bill, with two absences.

Sponsored by Rep. Paul Baumbach, D-Newark,  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 the tax year 2023.

The bill is projected to reduce revenues by nearly $25 million in fiscal 2024, nearly $56 million in fiscal 2025 and $57 million in fiscal 2026.

“Taken together, these changes will put more money in the pockets of working Delawareans at a time they most need this assistance,” said 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.”


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.

Gov. 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.

HB 89 now heads to the Senate for consideration.