Synopsis
Like under House Bill No. 13 (HB 13) and House Substitute No. 1 for HB 13 (HS 1 for HB 13), this Act adjusts the existing personal income tax brackets and applicable tax rates. Under this Act, for taxable years beginning after December 31, 2025, taxable income between $60,000 and $150,000 will continue to be taxed at a rate of 6.6%, but taxable income above $150,000 will be taxed at higher rates. The result of the changes under this Act will be that those with a taxable income of $188,500 or less will see no increase in personal income taxes, with 94% of Delaware taxpayers receiving an overall tax decrease. Like HS 1 for HB 13, House Substitute No. 2 for HB 13 differs from HB 13 as follows: • Creates additional tax brackets for taxable income not in excess of $60,000. • Decreases the tax rate for all tax brackets for taxable income not in excess of $60,000. • Creates 3 additional tax brackets for taxable income above $60,000 instead of 2. • Names this Act the “The John Kowalko, Jr., Fairness in Taxation Act”. In addition, House Substitute No. 2 for HB 13 differs from HS 1 for HB 13 as follows: • Further decreases the tax rate for all tax brackets for taxable income not in excess of $60,000. • Revises the tax brackets so that tax rates increase for taxable income above $150,000 instead of $125,000. • Adjusts the personal income tax filing threshold to align with the revised tax brackets. • Makes technical corrections to conform existing law to the standards of the Delaware Legislative Drafting Manual.