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Delawareans could see unemployment benefit tax relief again this year

Roman Battaglia
Delaware Public Media

State lawmakers want to give Delawareans further relief on their taxes this year.

Delawareans typically have to pay state taxes on any unemployment benefits they receive.

But last year, lawmakers waived those taxes to help put a little more money in residents’ pockets.

State Rep. Ed Osienski says giving another break this year is possible thanks to federal dollars helping to keep the state’s Unemployment Trust Fund filled.

“Our fund is in good shape right now,” he says. “We did not have to go out like many states and borrow federal dollars to replenish our fund. So our fund’s in good shape and we are in a position where we can do that.”

The savings per person varies on how much unemployment benefits someone collected last year. Benefits are taxed as a part of income, so Delewareans could save somewhere between 2 to 7 percent on those benefits.

Last year, the state provided around $25 million in tax relief, and Osienski says the relief needs to be extended because of the number of people continuing to struggle through the pandemic.

The bill also provides relief for employers, and ensures they don’t need to pay as much into the state’s Unemployment Trust Fund this year.

While this is a temporary measure, Osienski says he’d like permanent reform to the unemployment insurance system in the First State.

“Delaware’s benefit is kinda small compared to surrounding states,” Osienski says.

Delaware maximum weekly benefit is $400, which is lower than surrounding states. The state raised the benefit amount back in 2019.

Osienski says working in the construction industry, where workers are laid off all the time, he regularly sees workers pick jobs in New Jersey over Delaware, whose benefit is up to $713.

Osienski says the Unemployment Insurance Advisory Council will meet next year to talk about potential changes, including raising benefits, eliminating the state tax for good, and changing how different employers are charged for unemployment insurance.

Roman Battaglia is a corps member with Report for America, a national service program that places journalists into local newsrooms.

Roman Battaglia grew up in Portland, Ore, and now reports for Delaware Public Media as a Report For America corps member. He focuses on politics, elections and legislation activity at the local, county and state levels.