HB126 • 2025

AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO PERSONAL INCOME TAX.

Labor Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Shupe
Last action: 2025-05-22
Official status: House Revenue & Finance 4/17/25
Effective date: Not listed

Plain English Breakdown

The official source does not specify whether the Division of Revenue can create rules for reporting overtime information, so this claim was removed.

Overtime Tax Exemption Act

This act changes Delaware's personal income tax rules by exempting overtime pay for full-time hourly workers from state income tax and requires employers to report this information.

What This Bill Does

Exempts from state income tax any money earned as overtime by full-time hourly workers who work more than 40 hours a week, starting January 1, 2026, until December 31, 2027.
Requires employers to report the total amount of overtime pay given and how many employees received it for the year beginning January 1, 2025.

Who It Names or Affects

Full-time hourly workers who earn overtime pay.
Employers who have full-time hourly workers and give them overtime pay.

Terms To Know

Overtime: Extra hours worked beyond the standard work week, usually more than 40 hours in Delaware.
Division of Revenue: The part of the government that collects and manages money for the state.

Limits and Unknowns

This act only applies to full-time hourly workers who earn overtime pay, not salaried employees or those working less than 40 hours a week.
It is unclear how many employers will be affected by this requirement to report information about overtime pay.

Bill History

2025-05-22 Delaware General Assembly
Not Worked in Committee
2025-04-17 Delaware General Assembly
Introduced and Assigned to Revenue & Finance Committee in House

Official Summary Text

AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO PERSONAL INCOME TAX.
This Act exempts from State income tax any income received by a full-time hourly wage-paid employee for overtime work performed in excess of 40 hours in a week. This exemption applies for taxable years beginning on January 1, 2026, and ending before January 1, 2028.

This Act also requires each employer to provide information to the Division of Revenue about the total amount of overtime provided to full-time hourly wage-paid employees and the number of employees to whom overtime was paid in taxable years beginning January 1, 2025.

Current Bill Text

Read the full stored bill text

Legislation Document

SPONSOR:

Rep. Shupe & Sen. Buckson

Reps. Morris, Yearick; Sens. Hocker, Wilson

HOUSE OF REPRESENTATIVES

153rd GENERAL ASSEMBLY

HOUSE BILL NO. 126

AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO PERSONAL INCOME TAX.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend § 1106, Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:

§ 1106. Modifications.

(b)

Subtractions. —

There shall be subtracted from federal adjusted gross income:

(13) For taxable years beginning January 1, 2026, and ending before January 1, 2028, amounts received by a full-time hourly wage-paid employee as compensation for work performed in excess of 40 hours in a week.

a. Each employer making payment of any wages or remuneration taxable under this chapter to a resident or nonresident individual whose wage or remuneration is subject to withholding under the Internal Revenue Code shall submit to the Division of Revenue (“Division”), on forms prescribed by the Division, all of the following:

1. For the tax year beginning January 1, 2025, the total amount received by full-time hourly wage-paid employees as compensation for work performed in excess of 40 hours in a week and the total number of employees for which it was paid. This data is due not later than January 31, 2026.

2. For taxable years beginning January 1, 2026, and ending before January 1, 2028, the total amount received by full-time hourly wage-paid employees as compensation for work performed in excess of 40 hours in a week and the total number of employees for which it was paid. This data is due at the same time as the employer’s withholding return under § 1154 of this title.

b. The Division shall report the data collected and compiled under paragraph (b)(13)a. of this section to all of the following not later than 30 days after the date the data is due to the Division:

1. The Controller General.

2. The Director of the Office of Management and Budget.

3. The Secretary of the Department of Finance.

4. The Director and the Librarian of the Division of Legislative Services.

c. The Division may adopt regulations to administer and enforce this paragraph (b)(13).

SYNOPSIS

This Act exempts from State income tax any income received by a full-time hourly wage-paid employee for overtime work performed in excess of 40 hours in a week. This exemption applies for taxable years beginning on January 1, 2026, and ending before January 1, 2028.

This Act also requires each employer to provide information to the Division of Revenue about the total amount of overtime provided to full-time hourly wage-paid employees and the number of employees to whom overtime was paid in taxable years beginning January 1, 2025.