An Act To Amend Title 30 Of The Delaware Code Relating To Exclusion Of Military Pensions From Taxable Income.
Summary
SB219 amends Delaware’s personal income tax subtraction for pension income to increase the exclusion for United States military pensions. Under current law, Delaware allows a $12,500 subtraction for certain military pension income for taxpayers under age 60, and this bill expands and phases in a larger exclusion for military retirement pay regardless of age. The bill sets a staged increase beginning with taxable years starting January 1, 2022, and then raises the maximum military pension subtraction to $15,000 in 2027, $20,000 in 2028, and $25,000 for taxable years beginning on or after January 1, 2029.
The bill also preserves the existing pension and retirement-income subtraction framework for non-military retirement income, while creating a “greater of” calculation for taxpayers under 60 and for taxpayers 60 or older during the phase-in period. It defines “United States military pension” broadly to include pensions based on service in the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, NOAA commissioned corps, Public Health Service commissioned corps, and the National Guard. The measure is an amendment to Title 30, Section 1106 of the Delaware Code, which governs subtractions from federal adjusted gross income for state income tax purposes.
Impact
SB219 would reduce taxable income for eligible Delaware taxpayers receiving military retirement pay, thereby lowering state income tax liability for affected retirees. It changes Delaware’s income tax subtraction rules in Title 30 by increasing the amount of military pension income that may be excluded from taxation and by phasing that increase in over several tax years. The bill does not eliminate taxation of all retirement income; instead, it specifically expands the exclusion for military pensions while leaving the general pension and eligible retirement income subtraction rules in place for other taxpayers.
Sentiment
The overall sentiment reflected in the bill materials is favorable toward expanding tax relief for military retirees. The synopsis emphasizes that Delaware is behind many other states in exempting military retirement pay and frames the bill as a phased effort to improve competitiveness and fairness for veterans. The bill also has bipartisan and cross-chamber sponsorship, which suggests broad support rather than partisan conflict. No committee transcript or recorded vote information is provided, so there is no evidence in the supplied materials of organized opposition or divided debate.
Contention
The main policy issue is fiscal and structural rather than ideological: the bill increases the amount of income exempt from taxation, which may reduce state revenue, and it does so through a multi-year phase-in. Another point of distinction is that the bill benefits military pensioners specifically, not all retirees, which could raise questions about preferential treatment compared with other pension recipients. The text also reflects prior incremental changes to Delaware’s retirement-income exclusions, indicating that the scope and pace of tax relief for military pensions is the central legislative choice.
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