Act now to save money when filing your 2022 tax return next year

Thanks to a new law enacted by the Delaware General Assembly, Delaware taxpayers have new opportunities to save money.

Delawareans who save for school with the DE529 Education Savings Plan may qualify for a new tax deduction on their state returns.

“While our office oversees the management of the State’s investment portfolios, we also administer the DE529 Education Savings Plan which allows people to invest in the future of their loved ones,” said State Treasurer Colleen Davis. “Implementing a new tax deduction for DE529 contributions strengthens our commitment to helping people achieve a quality education without facing the possibility of years of student loan payments.”

Delaware tax filers are now eligible to deduct up to $1,000 of contributions to DE529 Education Savings Plans each year on their Delaware tax return (or $2,000 for joint returns) with a few additional conditions.

The deduction will NOT be available for:

• Tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school
• Individuals with a federal adjusted gross income greater than $100,000 (or $200,000 for joint returns).

“The Department of Finance is pleased to announce that this tax benefit will be available for qualifying contributions made throughout 2022,” said Secretary of Finance Rick Geisenberger. “With the completion of a newly launched personal income tax module of the State’s Integrated Revenue Administration System (IRAS), considerable programmatic changes were made to enable administration of this new tax benefit for qualifying 2022 tax filers.” Official notice of the “go-Live” for these technology updates was published to the December 2022 Register of Regulations, thereby allowing the tax deduction for qualifying contributions to DE529 Education Savings Plans made after December 31, 2021.

The passage of House Bill 145 earlier this year also creates a tax deduction for contributions to a DEPENDABLE account for people with disabilities. The deduction applies to any amount up to $5,000 ($10,000 for couples filing a joint return).

“DEPENDABLE allows individuals with disabilities and their families save money above the $2,000 threshold that jeopardizes state and federal means-tested benefits,” said Treasurer Davis. “DEPENDABLE accounts allow people with disabilities to be able to work, able to save, and able to thrive.”

Those without a DE529 Education Savings Plan or DEPENDABLE account can take advantage of the tax deductions by opening accounts today at 529.delaware.gov or able.delaware.gov.

Aspire529 provides money and financial training

State Treasurer Colleen Davis has announced the distribution of the inaugural Aspire529 awards. Aspire 529 provides $529 for foster youth aging out of the system to use for expenses related to continuing their education.

“Aging out of foster care presents many obstacles for young adults, with financial concerns often topping the list,” said Treasurer Davis. “Aspire529 will help them break through some of those barriers.”

This year’s eight award winners, four from New Castle County, three from Kent County, and one from Sussex County said they would put the money toward the cost of tuition, books, transportation, supplies, and child care.

In addition to the money, winners also received education on how to handle it. Each recipient was required to complete two personal financial coaching sessions from trained, skilled professionals at $tand By Me®.

“Having money to spend is just half of the equation,” Treasurer Davis said, “the other part is knowing the best way to manage it. Our office, along with the Plans Management Board, which endorsed the program, wanted to make sure Aspire529 wasn’t merely a handout, but included the knowledge and skills to build responsible financial behavior.”

The collaborative effort that went into the creation and implementation of the Aspire529 program shows how Delaware can rally together to help those who need it most.

“Positive outcomes for young adults are achieved through collaboration with community partners, affordable education, and development of self-sufficiency skills,” said Sophia Elliott,
Transitional & Independent Living Program Manager with the Division of Family Services. “The Department of Services for Children, Youth, and Their Families is happy to partner with Treasurer Davis to pave the way for bright futures for youth who have experienced foster care in Delaware.”

“Kind to Kids Foundation believes that every child deserves a bright future,” said President and founder Caroline Jones. “While we provide education, advocacy, and guidance to children in foster care, we are thrilled to know the State Treasurer is helping these children we assist today have a brighter tomorrow.”

“The Aspire529 program is great for our youth who experience financial barriers that may cause issues or disruption with continuing their education,” said Aisha Stanford, Life Line’s Program Manager at West End Neighborhood House Inc., “both the money and the guidance will be integral parts of their financial future.”

More information can be found at de.gov/aspire529. Questions about the program can be sent to Treasury_Aspire529@delaware.gov

Chaired by local entrepreneur and community leader, board scheduled to meet

As directed by the Delaware EARNS Act created by the signing of House Bill 205, members have been appointed to the Delaware EARNS Program Board.

Board members are:

• Fayetta Blake – Chair
• Colleen Davis – State Treasurer
• Rick Geisenberger – Secretary of Finance
• Christina Haas – Office of the State Insurance Commissioner
• Ethel Belfon – Department of Labor
• Donna Vieira – Chair of the Plans Management Board
• Robert Herrera – Member at Large

Delaware EARNS (Expanding Access for Retirement and Necessary Savings), a State-facilitated, universally available retirement savings plan, providing a convenient way for all workers to save for retirement, requires businesses with more than five employees that don’t currently offer a retirement plan to participate through a simple payroll process.

“I am honored to have been chosen by Governor Carney to chair the Delaware EARNS Program Board,” said Fayetta Blake, the founder and Executive Director of Pathways to Success, Inc., and an entrepreneur with an extensive background in community banking and financial services. “I am excited to work with such committed people on a project that will help secure financial security for Delawareans who currently have no effective way to save.”

The Delaware EARNS Program Board will oversee the initial design and implementation of all administrative aspects of the Delaware EARNS program including, marketing and promotional responsibility, vendor management, and investment oversight.

The inaugural meeting is scheduled for Tuesday October 4, 2022. Details of the meeting including the agenda and how to join virtually or in person can be found on the Delaware Public Meeting Calendar.

“The composition of the Delaware EARNS Program Board could not be stronger given the critical need for the work to be done,” said Treasurer Colleen Davis. “This landmark program could serve up to 150,000 Delawareans, while addressing all three of my top priorities; bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence.”

Signing of HB 205 by Governor Carney allows for next steps

Almost 150,000 Delaware workers got a step closer to secure retirement savings when Governor Carney signed HB 205, the Delaware EARNS Act, into law this morning. With the enactment of the legislation, the Office of the State Treasurer (OST) officially begins building the infrastructure that will drive the landmark retirement program.

Delaware EARNS (Expanding Access for Retirement and Necessary Savings) requires businesses with more than five employees that don’t currently offer a retirement plan to participate through a simple payroll process.

“We’ve worked long and hard to make this program a reality for Delawareans who lack access to an employer-sponsored retirement program,” said State Treasurer Colleen Davis. “I am grateful to Representative Larry Lambert, Senator Nicole Poore, all of their colleagues in the General Assembly, the AARP of Delaware, and of course the Governor for helping us get here.”

OST will hire an executive director who will guide the operation of the program and work with the Delaware EARNS Program Board, established by the legislation to oversee initial design and implementation of the program. The Board will consist of the State Treasurer, Secretary of Finance, Insurance Commissioner, Secretary of Labor, and chairperson of the Plans Management Board, each of whom may appoint a designee, as well as two members of the public chosen by the Governor.

“It shouldn’t matter what your background or job is: every Delawarean deserves the opportunity to enter into retirement with economic dignity and security,” said Rep. Lambert, D-Claymont, prime sponsor of the legislation. “For small businesses and the almost 150,000 Delaware workers lacking an employer-sponsored saving program, the Delaware EARNS program will be financially transformative, allowing residents to save for the future while filling a critical need in the marketplace. This new program will put thousands of working Delawareans on a level playing field when it comes to their financial future, and I am excited to see it in action.”

“While every Delaware worker deserves to enjoy their golden years, nearly one in five of our neighbors currently won’t be able to achieve the dream of a financially secure retirement, simply because their employer does not offer a retirement savings plan like a 401(k),” said Sen. Nicole Poore, D-New Castle, the Senate prime sponsor of HB 205. “I want to thank Rep Lambert and Treasurer Davis for recognizing that we can do better for Delaware’s working families. The Delaware EARNS Act signed into law today is a win for thousands of workers who will be able to sleep tonight with the peace of mind that comes from knowing they are on a stable path to a more financially secure future. It’s a win for the hundreds of small businesses that will be on a more even playing field with the major corporations that can afford to provide these competitive benefits, and it’s a win for Delaware’s middle class by bringing a financially secure retirement within reach for nearly 150,000 of our neighbors.”

AARP Delaware, its staff, and its more than 187,000 members advocated for the creation and passage of Delaware EARNS.

“The pandemic has shown how vital it is for Americans to have savings to depend on. We must make it easier for workers to save so they can take control of their future,” said AARP Delaware State Director Lucretia Young. “AARP was pleased to work alongside our State Treasurer to help provide an easy pathway for workers to start building a safety net and grow the savings they need for a more secure future.”

More information about Delaware EARNS can be found at de.gov/earns.

August marks “ABLE to Save Month,” and Delaware State Treasurer Colleen Davis wants to use the opportunity to celebrate Delawareans with disabilities and the freedom, independence, and possibilities their ABLE accounts provide.

ABLE (Achieving a Better Life Experience) plans allow individuals with disabilities and their families to save for a broad range of expenses on a tax-advantaged basis without jeopardizing their benefits from supplemental security income (SSI), Medicaid and other state and federal programs.

“Since taking office, I have focused on three main priorities: bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence,” Treasurer Davis said, “and it’s important to remember those are my priorities for all Delawareans, including those with disabilities. I’m proud that our own ABLE program, DEPENDABLE, provides a way for those with disabilities to save for the future.”

People with disabilities who receive SSI benefits may not have more than $2,000 to remain eligible for SSI and Medicaid. This limitation makes it difficult for many people with disabilities to live the independent lives they deserve and desire.

“A DEPENDABLE account offers solutions that empower our most vulnerable residents to make long-term planning decisions,” Davis said. “The ability to save creates independence by promoting the importance of financial wellness.”

As of June 30, 2022, DEPENDABLE held 242 funded accounts with assets totaling more than $2.1 million.

In addition to the existing benefits of a DEPENDABLE account, Delawareans who save with DEPENDABLE now also receive a deduction on their state income tax.

“A new law passed by the General Assembly establishes a tax deduction of up to $5,000 ($10,000 for couples filing a joint return) for contributions to DEPENDABLE accounts,” Davis said. “I thank the members of the General Assembly and Governor Carney for joining me in helping people with disabilities and those that support them.”

For more information about DEPENDABLE, visit able.delaware.gov, or visit the National Association of State Treasurers to learn more about ABLE Savings Plans.