CHAPTER 363

AN ACT TO AMEND TITLE 30, DELAWARE CODE, RELATING TO INCOME TAX.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. § 1101, Title 30, Delaware Code, is amended by adding the following definitions to said section:

"Adjusted gross income" means the amount the taxable's net income under this chapter would be if the exemptions allowed under § 1117 of this title and the deductions allowed under § 1118 of this title were not allowed.

"Gross income" means the total income from whatever sources derived, whether within Delaware or elsewhere, except income excluded by §1116 of this title.

"Nonresident apportionment ratio" means the ratio that the adjusted gross income of a nonresident bears to his gross income.

Section 2. §1101, Title 30, Delaware Code, is amended by striking the portion of the definition of "Taxable" that appears in subparagraph 7 of said definition and inserting in lieu thereof a new subparagraph 7 to read:

(7) every natural person who is a nonresident of the State of Delaware but only to the extent that such person received income during the taxable year:

(a) as compensation, as an employee in the conduct of the business of an employer, for personal services:

(i) rendered in the State of Delaware, or -

(ii) attributable to employment in the State of Delaware and not required to be performed elsewhere or

(b) to the extent that such person derived net profits from a profession, vocation, business, trade or commerce conducted in the State of Delaware;

Section 3. § 1106, Title 30, Delaware Code, is amended to read:

§ 1106. Members of armed forces stationed in state by federal government

Members of the armed forces of the United States who are domiciled outside of this state but by reason of their assignment of duty are stationed in this state are exempt from payment of tax under this chapter.

Section 4. § 1117, Title 30, Delaware Code, is amended by adding a new subsection (c) as follows:

(c) In the case of a nonresident the credits allowed by this section shall be limited to a figure ascertained by multiplying the credits provided by this section and his nonresident apportionment ratio.

Section 5. § 1118, Title 30, Delaware Code, is amended by adding the following sentence to subparagraph (3):

In the case of a nonresident, the deduction for Federal income taxes paid shall be limited to a figure ascertained by multiplying the total Federal income taxes paid and his nonresident apportionment ratio, but only if such figure is lower than the deduction permitted for Federal income taxes paid as aforesaid.

Section 6. § 1118, Title 30, Delaware Code, is amended by striking paragraph (16) (A) in its entirety and inserting in lieu thereof a new paragraph (16) (A) to read as follows:

(16) (A) An individual may elect to use a standard deduction which shall be an amount equal to 10% of the adjusted gross income or $500, whichever is the lesser; such standard deduction to be in lieu of all other deductions authorized by

this section except a deduction for Federal income taxes paid, not to exceed $300, and deductions relating to the operation of a business or trade. A married couple filing a joint return under section 1163 of this title may elect to use a standard deduction which shall be equal to 10% of the adjusted gross income or $1,000, whichever is the lesser; such standard deduction for a married couple filing jointly to be in lieu of all other deductions authorized by this section except for Federal income taxes paid, not to exceed $600, and deductions relating to the operation of a business or trade. In the case of a nonresident electing to use a standard deduction, the deduction for Federal income taxes paid shall be limited as provided in section 1118 (3) of this title and deductions relating to the operation of a business or trade shall be limited to such operation in Delaware.

Section 7. § 1118, Title 30, Delaware Code, is amended by striking paragraph (16) (B) and renumbering paragraphs (16) (C), (16) (D), and (16) (E) accordingly.

Section 8. § 1118, Title 30, Delaware Code, is amended by adding a new paragraph (18) as follows:

(18) In the case of a nonresident, who does not elect to use the standard deduction, as provided in (16) (A) of this section, the deductions allowed by this section, except deductions relating to the operation of a business or trade, shall be limited to a figure ascertained by multiplying such deductions and his nonresident apportionment ratio, and deductions relating to the operation of a business or trade shall be limited to such operation in Delaware.

Section 9. § 1163, Title 30, Delaware Code, is amended by striking the period at the end of § 1163 and inserting in lieu thereof the following:

provided that each received income includable in net income under this chapter, or provided that the gross income of both is entirely attributable to one spouse.

Section 10. § 1164, Title 30, Delaware Code, is amended by striking said section in its entirety and inserting a new § 1164 in lieu thereof to read as follows:

§ 1164. Members of armed forces, domiciled outside of Delaware

Members of the armed forces of the United States who are domiciled outside of Delaware but by reason of their assignment of duty are stationed in Delaware need not make a return.

Section 11. § 1191, Title 30, Delaware Code, is amended by inserting a period after the word "dependent" appearing in the second sentence thereof and by striking the following: "and a credit equal to the estimated credits taxable is entitled to under section 1120 of this chapter."

Section 12. § 1192, Title 30, Delaware Code, is amended by striking said section in its entirety and inserting a newt § 1192 in lieu thereof to read as follows:

§ 1192. Use of withholding tables

At the election of the withholding agent with respect to any taxable, the withholding agent shall deduct and withhold from the compensation paid to such taxable, in lieu of the taxes required to be paid and withhold under section 1191 of this title, a tax to be determined in accordance with withholding tables to be furnished by the State Tax Department.

Section 13. § 1120, Title 30, Delaware Code, is amended by striking said section in its entirety and inserting a new § 1120 in lieu thereof to read as follows :

§ 1120. Credit to resident taxable for income taxes paid to other states

Upon his presenting evidence satisfactory to the Commissioner of the fact of such payment, a resident taxable shall be allowed a credit against the tax paid under this chapter for income taxes paid to any state other than Delaware upon income both derived therefrom and subject to tax under this chapter. The credit allowed under this section shall not reduce the tax otherwise due under this chapter to an amount less than would have been due if the income subject to tax by such other state

was ignored. No credit shall be allowed under this section for taxes which the resident taxable has reported as a deduction under section 1118 of this chapter.

Section 14. The provisions of this act shall take effect on January 1, 1967.

Approved June 7, 1966.