New bill lessens tax burden on low-, middle-class Delaware families

Legislators introduced a bill Wednesday that aims to provide financial relief for low and middle income families in Delaware.

House Bill 253, sponsored by Rep. Paul Baumbach, D-Newark, and 21 Republican and Democratic co-sponsors, would make Delaware’s Earned Income Tax Credit refundable.

Introduced in 1975, the federal EITC was intended to offset federal income taxes, social security payroll taxes and supplemental earnings while rewarding work.

In Delaware, the state EITC is non-refundable, which lawmakers say reduces the tax liability but doesn’t provide a refund to residents. While it may offer tax relief to families with state income tax liability, sponsors of the bill say it doesn’t offer any benefit to working families that have incomes too low to owe income taxes.

If passed, Baumbach’s bill would make the EITC refundable and capable of exceeding the tax amount otherwise due. The credit would be gradual, increasing 1 percent per year from 6 percent of the corresponding federal earned income credit in 2017 until it reaches 15 percent of the federal EITC in 2026.

“Earned Income Tax Credit is probably one of the best public policy programs that can really lift people out of poverty,” Baumbach said in a statement.

“EITC cuts taxes for low-income families, provides incentives to work, helps stabilize income and puts families on firmer ground. Making Delaware’s Earned Income Tax Credit available to all families who qualify for the federal program will have an immensely positive effect on Delaware families, and I look forward to pushing this effort forward.”