After criticism that updated corporate franchise revenue numbers weren’t available during the March DEFAC meeting, the May meeting showed a 1% increase in corporate franchise revenue compared to last year.
It brings corporate franchise revenue from $1.32 in FY 2025 to $1.33 billion in FY 2026.
It's about $9 million more than the state projected from the corporate franchise than its March DEFAC meeting.
But the 1% increase received a lukewarm reaction from State Senator Trey Paradee, chair of the budget-writing Joint Finance Committee.
"I mean, obviously it's a low number..." he said.
Paradee asked if he could see averages in corporate revenue over the last 10 year, which Secretary of State Charuni Patibanda-Sanchez said her office would provide.
Revenue of LLCs and LPs coupled together is projected to be $1.89 billion. It's a huge piece of revenue for the state, making up about one third of its annual operating budget.
May’s overall revenue estimates are up, leaving the state $196 million more to spend on its FY 27 budget than projected in March. The budget-writing Joint Finance Committee begins its final budget mark-up next week.
But Patibanda-Sanchez said that new business entities formed in Delaware increased more than 15% compared to the previous year.
"We have turned a corner and are proving to the world that Delaware is rowing in one direction," she said. It is critical that when we speak about the franchise, Delaware speaks in one informed voice."
Most of that increase comes from new LLCs and LLPs registered, which increased by more than 104 thousand from 2024 to 2025. The state also gained approximately 24 thousand corporations.
Department of Finance Director of Research and Tax Policy David Roose said the state is on track, despite some volatility in FY 26 numbers. He explained that the May estimate for corporate tax revenue is up about $29 million from March. But these come from select sources:
"There are a small number of very extraordinary transactions that have driven this estimate up," Roose said. "Other than those extraordinary transactions, we don't think there any reason to think that we're off course. On the other hand, we also had a small number of very extraordinary refunds that largely offset this."
Rouse added the state is still waiting for a clearer picture of Delaware’s decoupling from the federal tax code. Because of how corporations file taxes, he said that won’t come until next spring.
DEFAC also reports May’s overall revenue estimates are up, leaving the state $196 million more to spend on its FY 27 budget than projected in March. The budget-writing Joint Finance Committee begins its final budget mark-up next week.
The increase in corporate franchise revenue from 2024 to 2025 at last year's meeting was .5%.
