A bill seeking to impose higher income tax rates on Delaware’s high-wage earners failed to win release from the House Revenue & Finance Committee this week.
Delaware currently has six income tax brackets, topping out at 6.6% on annual income exceeding $60,000.
House Bill 64 sought to establish three new brackets, taxing earnings in excess of $125,000 at the following rates:
- 7.10% of taxable income in excess of $125,000, but not in excess of $250,000;
- 7.85% of taxable income in excess of $250,000, but not in excess of $500,000; and
- 8.6% of taxable income in excess of $500,000.
At present, the state is not in need of additional revenue. Last week, the Delaware Economic and Financial Advisory Council issued its latest state revenue forecast, significantly increasing the amount of spendable cash available to legislative budget-writers. Compared to the previous projection issued in December, the new estimate increased the state spending limit by $322.1 million.
According the Tax Foundation, Delaware is one of 32 states to levy graduated-rate income taxes, with the number of brackets, and the top marginal rate (see chart) varying widely from state to state.