State House lawmakers passed a bill seeking to decouple federal corporate tax code from state tax code during an extraordinary session Thursday.
The legislation is designed to counteract a $400 million revenue shortfall anticipated over the next several years based on tax code changes made in The One Big Beautiful Bill Act.
Those changes include tax break provisions for businesses that would automatically apply to Delaware without further action.
House Majority Leader Kerri Evelyn Harris is one of the bill’s sponsors alongside her Senate counterpart State Sen. Bryan Townsend. Harris said it ensures Delaware prioritizes people over corporations.
“With that understanding, that balance in mind, we have created these amendments that are now a part of this to make sure that the startups in our state have the ability to compete and maybe bust up some of these monopolies that have been generated from poor tax policy in the past,” Harris said.
If this bill passes, small businesses remain eligible to deduct up to $2.5 million in qualifying equipment and property purchases every year.
Harris added this move ensures Delaware’s tax laws reflect its policy choices.
“This bill keeps Delaware's tax policy stable and predictable for our businesses, taxpayer and taxpayers, while giving the General Assembly time to review and respond thoughtfully to changes in federal law.”
Several GOP members voiced their disapproval of the extraordinary session, calling the emergency manufactured.
“This is what the former Secretary brought up, that the projected impact of these federal tax incentives over the first year is 146 million, which only amounts to 1.07% of the state revenue and is well within the 2% budget stabilization that we set aside every single year,” State Rep. Bryan Shupe said.
He added he trusted the assessment that there is not a fiscal emergency in Delaware.
Rep. Mike Smith said he found the legislature’s treatment of the OBBBA ironic.
“[It’s] great news that we put together a billion dollars to change rural health care transformation in our state,” Smith said. “The same bill that we're arguing about today, the OBBBA, Big, Beautiful Bill – I don't like to call it that – that why we're here today is the same bill that's giving us the money for that, we can't pat ourselves on the back for one and talk trash on the other.”
The Meyer administration announced yesterday it is applying for $1 billion in federal funding for rural health care projects through the Rural Health Transformation Program. The OBBBA established the program and funneled $50 billion into it.
“What’s happening [is], in my words, that this is political, not financial,” Shupe said. “... And I'd like to remind people that the fire is not in Washington, it's right here. I've said this many times before.”
Harris said maintaining a stable budget relies on keeping that $146 million with the state.
“We can – and do – absolutely support the many businesses and business owners who call Delaware home, but we have to do so in a responsible way, not by destabilizing our budget and giving away millions of tax dollars that have already been allocated to support schools, public safety, and services that our communities rely on,” Harris countered. “Temporarily decoupling is the right thing to do, and I appreciate my colleagues for taking this step today to protect our state."
House lawmakers also passed two other bills Thursday, one extending the deadline for New Castle County residents to pay their property taxes and another allowing remote participation. The property tax extension bill heads to Gov. Meyer for his signature.
New Castle County property owners now have until Dec. 31 to pay their property taxes, which are expected to be sent out by Nov. 20.
Delaware’s Senate will take up the bill Wednesday in their own extraordinary session.
