Gov. Minner Signs Bill Establishing Delaware's First State Earned Income Tax Credit
Gov. Minner Signs Bill Establishing Delaware's First State Earned Income Tax Credit
State Tax Credit is 20 Percent of Federal EITC
Governor Ruth Ann Minner today signed a bill creating the state's first Earned Income Tax Credit, which will result in a savings of up to $475 for low-income, working Delawareans who qualify for the federal EITC program.
Under Senate Bill 230, co-sponsored by Sen. Margaret Rose Henry and Rep. John Atkins, Delaware would offer an Earned Income Tax Credit that is 20 percent of that offered by the federal government's EITC program, created in 1975 to reward the efforts of hard-working, low-income individuals. Qualifying Delawareans would have to meet income requirements that vary depending upon whether or not they have children and how many children they have.
"S.B. 230 will reduce the state income tax liability for 14,000 state residents and eliminate it entirely for another 14,000 Delawareans," Gov. Minner said. "Obviously, this program, combined with the federal EITC program, will boost the standard of living of hard-working Delawareans, encouraging them to stay in the workforce."
Unlike the federal EITC, Delaware's credit is non-refundable, but it provides an average savings of $179 for those individuals who have their tax liability reduced. This figure includes those taxpayers who, under the new program, will no longer be paying any state income tax.
In the 2002 tax year, more than 55,000 Delawareans received $94 million dollars in federal income tax credits. Those numbers are expected to grow significantly because of a federal law expanding EITC eligibility in 2005 and 2008. The state EITC will take effect with the 2006 tax year, which means it would apply to filings in early 2007.
Under the 2006 eligibility requirements, a single parent with two children who earns $24,500 would receive a federal earned income tax credit of $2,416 and a state EITC of $475.
"This tax cut will help those Delawareans most in need of relief," Rep. Atkins said. "In all, approximately 28,000 low and moderate income taxpayers will enjoy some type of state income tax reduction as a result of this legislation."
"I've been working on establishing an EITC for Delaware for many years and I am so happy we've finally reached an agreement for the Governor to sign," Sen. Henry said. "This is a great accomplishment for Delaware to join the 18 others that offer a state EITC."
http://www.state.de.us/governor/082205%20-%20eitc%20bill%20signing.shtml#TopOfPage