Delaware State News | by Matt Bittle
Democratic lawmakers on Wednesday filed legislation that would raise income taxes for the state’s top earners. House Bill 64 would create three new income tax brackets that would affect only people who make at least $125,000 a year.
Delaware currently has six personal income tax brackets, with the top one imposing a rate of 6.6% on all income of more than $60,000. The bill would tax income from $125,001 to $250,000 at 7.1%, $250,001 to $500,000 at 7.85% and above $500,000 at 8.6%. The state’s top bracket has remained at $60,001 and up for more than 20 years.
Under the legislation, a taxpayer who earns $250,000 in a year would pay an additional $625.
“This bill is intended to ensure a more fair and equitable progressive tax structure that is sustainable and not overly burdensome to any category of earners,” main sponsor Rep. John Kowalko, D-Newark, said in a statement. “It has been carefully calculated to apply a minimal amount of tax increases while ensuring a sustainable revenue source in future economic downturns.”
Personal income taxes are among Delaware’s most consistent and reliable revenue sources, meaning the levels remain similar regardless of the state of the economy.
“An income tax structure that has graduated rates for lower incomes but a flat tax for all top-earners is, to be blunt, only half-built. Rightfully, we tax the first $60,000 earned at lower rates, which increase step-by-step,” co-sponsor Sen. Marie Pinkney, D-Bear, said in a statement. “But the final step — 6.6% for all income $60,000 and above — should be the middle of the ladder, not the end.
“Other states and the federal government recognize this and have brackets for incomes up to the millions. That makes sense, not just because it’s fair but because it is built to last. As inequality grows and wealth is moved from bottom to top, our tax policy should change with the times. This bill helps us do that and I am proud to be on as a Senate sponsor.”
The bill has been assigned to the House Revenue & Finance Committee.