DOVER, Del. – Delawareans may not be obligated to pay federal taxes on state relief rebate checks they received last year. This comes after the House of Representatives unanimously passed House Bill 25 Thursday.
The General Assembly overwhelmingly approved the 2022 Delaware Relief Rebate Program, which established a relief rebate – a one-time direct payment of $300 per Delaware resident taxpayer who filed personal income tax returns for tax year 2020 and adult residents who did not file a 2020 tax return. The rebate is not subject to Delaware income taxes. However, the payment still could be federally taxed under the original version of the law.
House Bill 25, sponsored by House Majority Leader Rep. Valerie Longhurst, would declare that the relief rebate payments be treated as a qualified relief payment under Section 139 of the Internal Revenue Code and is eligible to be excluded from a taxpayer’s gross income. This essentially would exempt residents from paying federal taxes on those $300 payments.
“The rebates were already excluded from state income tax and this bill, once enacted, will ensure that Delawareans will not owe any federal tax on the payments either,” said House Minority Leader Rep. Lyndon Yearick, R-Camden, Wyoming. “I hope we can retain the bipartisan cooperation demonstrated on this measure as we look to further help working Delawareans struggling with higher inflationary costs.”
According to the General Assembly, government money received during the pandemic could qualify as a disaster relief payment and be excluded from a person's gross income, which saves people from paying taxes on that $300 payment. However the payment still could be federally taxed under the original version of the law.
HB 25 now heads to the Senate for consideration.