DelawareDelaware residents could subtract extra overtime pay from taxable income
Starting with tax years in 2027, Delaware residents who earn extra pay for overtime could subtract some of it from income used to calculate state tax.
What it does
Starting with 2027 tax years, Delaware residents could subtract extra overtime pay from income used to calculate state tax, up to $12,500 or $25,000 for joint filers. The allowed amount shrinks at higher incomes.
Argument forEligible workers could owe less Delaware income tax because they could subtract some of their extra overtime pay from income used to calculate state tax.
Argument againstHigher-income workers could get a smaller tax break because the allowed subtraction starts shrinking above $150,000 for single filers or $300,000 for joint filers.
More detail
Delaware would subtract qualifying overtime premiums from residents' income when calculating state tax. This covers Delaware residents who receive qualifying overtime pay. Only the extra pay above the regular hourly rate counts. The limit is $12,500, or $25,000 for married couples filing jointly. The allowed amount starts shrinking when federal modified adjusted gross income exceeds $150,000 for single filers or $300,000 for joint filers. Delaware would use federal deduction rules as they stood on December 31, 2025, even if the federal deduction later ends. This would apply to tax years beginning on or after January 1, 2027.
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Where it stands
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Jun 23Introduced and Assigned to Executive Committee in SenateIntroduced
Taxes & BudgetEconomy & Jobs