AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO THE CHILD AND DEPENDENT CARE EXPENSE TAX CREDIT.
Summary
House Bill 274, as substituted, would increase Delaware’s child and dependent care expense tax credit for resident individuals. Under current law, the state credit equals 50% of the federal child and dependent care expense credit. The bill changes that to a 100% match for taxable years beginning on or after January 1, 2027, meaning eligible taxpayers could claim a Delaware credit equal to the full federal credit amount, subject to the limitation that the credit cannot exceed the taxpayer’s Delaware income tax liability.
The bill also preserves the existing rule for married spouses who file a joint federal return but elect separate Delaware returns: the credit may only be applied against the tax of the spouse with the lower taxable income, and it still cannot exceed that spouse’s tax due. In addition, the substitute includes technical drafting corrections to align the statute with Delaware’s legislative drafting standards.
Impact
HB274 would amend Title 30 of the Delaware Code, section 1114, by expanding the state child and dependent care expense credit from a partial to a full match of the federal credit beginning in tax year 2027. This would increase the value of the credit for eligible resident taxpayers who incur qualifying child or dependent care expenses, while leaving the credit nonrefundable and capped at the amount of Delaware tax otherwise due. The bill would not create a new credit category, but would materially increase the existing credit’s benefit and likely reduce state income tax revenue associated with claimants who qualify.
Sentiment
The available bill text and synopsis suggest generally favorable support for expanding tax relief for families with child and dependent care expenses. The substitute version indicates a policy consensus around increasing the credit, while delaying implementation until 2027, which may reflect concern about fiscal timing or administrative preparation. No committee transcripts or recorded votes were provided, so there is no direct evidence of opposition or debate in the supplied materials.
Contention
The main policy issue apparent from the bill is the cost and timing of the expansion. Supporters would likely favor the larger credit as a way to help working families offset child care and dependent care costs, while any concerns would likely center on the revenue impact to the state and the delayed effective date. The bill also retains the existing limitation that the credit cannot exceed tax liability and the special rule for separately filing spouses, so there is no indication of broader structural controversy beyond the size and start date of the credit increase.