A working group examining options to offer tax relief and modernize Delaware property tax code looks at circuit breakers and income based relief.
Circuit breakers are refunds or relief provided by the state government to residents whose property tax payments exceed a portion of their income the state deems cumbersome.
Ron Rakow, a fellow at the Lincoln Institute of Land Policy, gave the Taskforce a rundown on how more than 30 other states have pursued this method.
Nearby Washington DC and Maryland use circuit breakers. Massachusetts has a senior-only program. New Jersey has a more general tax relief program.
He said the most commons model sets a “threshold” or a maximum percentage of income - after which a person does not have to pay property taxes.
The other is a “sliding scale” that determines relief eligibility based on income bracket. All people in a bracket qualify for the same relief, regardless of their property bill.
And states incorporate different factors, based on groups it's targeting for relief and revenue it has available to support the program. These include co-pays, or offering the relief to specific groups only, such as seniors or veterans.
"You can also place a limit on the home value to be eligible for a circuit breaker program," he said. "So you could perhaps say that homes above $700,000 would not be eligible."
This was the third meeting of Delaware’s Property Tax Relief and Modernization Working Group, set up through legislation this year to examine potential long-term reforms to Delaware’s property tax system following statewide reassessment completed in 2024 and 2025.
State Senator Russ Huxtable, a member of the taskforce, said identifying or correlating property records with tax income records would be logistically difficult. And income based relief will be hard to define.
"Even the trying to find out who actually is paying rent at a location, and then also, are we looking at household income?" he said. "And I don't know that household income is captured."
Another challenge taskforce members mentioned is that some people in need of relief don’t file federal income taxes.
Rakow acknowledged the drawbacks. He added that people’s income can vary year to year, and that means relief has to be applied for annually.
But he added other states use state income tax as a starting point then add factors based on populations they’re targeting and data they have available.
He added some states build a circuit breaker application into their income tax return. It's possible to create a separate filing process for those with a “no-tax” status. But this does increase administrative load.
