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State Rep. Lyndon Yearick (R–Camden, Wyoming, Woodside) is advancing a package of four bills designed to ease the financial burden on low- and moderate-income Delawareans struggling with rising costs and a slowing economy.
“Working families and those seeking employment need relief,” Rep. Yearick said. “Food and energy prices continue to rise, hiring has slowed, Delaware currently has the seventh-highest unemployment rate in the nation, and some economists warn we could face a recession by the end of the year. For families searching for affordable housing, the situation is even more dire.”
According to the Bureau of Economic Analysis, average personal consumption expenditures per person in Delaware are $57,672 annually.
“If enacted, these bills would improve the financial outlook for tens of thousands of Delawareans and help give our most challenged residents a better chance to make ends meet,” Yearick said.
The Delaware Life Affordability Package includes the following measures:
• Earned Income Tax Credit (EITC) Expansion:
House Substitute 1 for House Bill 99 replaces an earlier proposal. It would amend Delaware’s Earned Income Tax Credit by making it fully refundable at 10 percent. Modeled after Pennsylvania law, the credit would equal 10 percent of a taxpayer’s federal Earned Income Tax Credit, up to a maximum of $805. The credit would first be applied to any state income tax owed, with any remaining amount refunded directly to the taxpayer.
The Earned Income Tax Credit is widely regarded as an effective anti-poverty tool, helping supplement the earnings of modest-income workers. Currently, more than 60,000 Delawareans benefit from it each year. This proposal would allow eligible residents to collectively receive an additional $10 million annually.
• Doubling the Retirement Income Tax Exclusion for Vulnerable Retirees:
Introduced last April, House Bill 108 would double the amount of retirement income Delawareans (age 60 and older) could shield from the state income tax from $12,500 to $25,000. Rep. Yearick intends to amend the bill to focus eligibility on those most at risk. Under the revised measure, individuals earning less than $30,000 annually and households with combined incomes of less than $60,000 per year would qualify.
• Expansion of the Child and Dependent Care Credit:
This new House Bill, which is expected to be filed shortly, would amend the Delaware Child and Dependent Care Credit to make it more valuable to disadvantaged families. Currently, qualifying taxpayers may claim a non-refundable state income tax credit equal to 50% of the federal Child and Dependent Care Tax Credit. This legislation would increase the state credit to 100% of the federal amount for households with annual income below $60,000, helping working families offset the high cost of care. Eligible recipients could receive a credit of up to $3,000 per child for up to two children. Those above the income threshold would continue to have access to the current state tax credit.
• Realty Transfer Tax Relief for Affordable Housing:
Set at 4% of a home’s purchase price, Delaware’s realty transfer tax is among the highest in the nation. The tax is actually an amalgam of two separate levies. The state government imposes a 2.5% tax, with applicable county or municipal governments usually imposing the remaining 1.5%.
Applied to the approximate median value of a single-family home in Delaware, $400,000, the combined tax results in a total obligation of $16,000, typically split between the buyer and seller.
This proposal would reduce that burden for qualifying affordable housing transactions.
Under the bill, expected to be filed shortly, homes sold for less than $350,000 would not be subject to the state’s 2.5% portion of the transfer tax.
Homes sold for between $350,000 and $500,000 would have their total transfer tax reduced from 4% to 3%, in equal one-quarter percent reductions over four years, starting January 1, 2027. Any homes in this price range sold after January 1, 2030, would pay a 3% realty transfer tax. Local governments’ transfer tax revenue would not be impacted.
Rep. Yearick acknowledged that his proposals would reduce the amount of money flowing into the state’s coffers, with the full fiscal impact to be determined after the Office of the Controller General analyzes each bill. However, he said the four pieces of legislation are means-tested, helping those in the most challenging circumstances while limiting the potential state revenue reduction.
“Our state should focus on helping those who need it most, when they need it most,” Yearick said. “While some may worry about reduced state revenue, they should also consider the long-term cost of increased public aid. Reducing financial pressure on vulnerable citizens up front is more efficient and more effective than forcing families into government assistance programs later.”
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