DOVER, Del. - The Delaware House of Representatives has passed HB 255, aimed at separating segments of Delaware tax code from the Trump Administration’s “One Big Beautiful Bill Act” in an effort to avoid a $400 million budget shortfall.
As WBOC previously reported, Democratic lawmakers in Delaware argued the OBBBA includes major corporate tax breaks that would have a direct impact on the state’s revenue. Should the OBBBA take effect without changes to Delaware tax code, the tax cuts would be retroactive for businesses spanning back to 2022 and all tax payers in 2025, leaving Delaware with a projected $400 million deficit over the next few years, according to the House Majority Caucus.
The solution, Democrats proposed, was to “decouple” Delaware’s tax code from certain federal provisions before the One Big Beautiful Bill Act goes into effect.
Republicans, in response, pointed to the expected financial woes as an example of poor budgetary planning by Governor Matt Meyer and the Democrats.
Rep. Bryan Shupe (R-District 36) says Democrats are placing blame on Washington when, in reality, the shortfall is due to overspending by the majority party in the state.
"They're overspending. The rate of spending 30% increased over the last four years, with only an 18% increase coming in the door, which is what's happening here in Delaware."
Lawmakers say HB 255, first introduced on Nov. 5, would not eliminate write-offs for property depreciation or expenses, but would adjust the timing of the deductions over a multi-year period instead of a significant, immediate tax break. The bill was advanced out of committee on Nov. 7.
On Thursday, Nov. 13, the House of Representatives met in a special session to vote on HB 255. Requiring a three-fifths majority, the bill passed 26-13. Two representatives were listed as absent during the vote.
“Every day, Delawareans are struggling to pay for housing, fill their gas tanks, afford a doctor’s visit, or buy their prescriptions," said Rep. Kerri Evelyn Harris, who co-sponsored the bill along with Sen. Bryan Townsend. "Instead of focusing on those real challenges, Washington Republicans passed a tax plan that gives more to the wealthy and big corporations while working people are left footing the bill.”
Rep. Kerri Evelyn Harris says the legislation helps maintain critical funding to promote statewide growth and opportunity.
"We are keeping funding in our budget that is going to help everyone — individuals, businesses, all of Delaware — grow and thrive. And that was really our goal."
House Republicans said the passage of the bill was hostile to Delaware businesses and was only made possible through an allowance of remote voting, passed earlier in the day on Thursday.
"Meeting in an extraordinary session and changing our House Rules to allow remote voting solely to ensure the passage of House Bill 255 will do nothing but confirm that Delaware is now a volatile business venue," the House Republican Caucus said. "Enacting this measure is a fool’s bargain that trades short-term monetary gains for long-term financial stability and an uncertain future."
During today’s session, Republicans warned that the change could hurt Delaware’s business climate. Shupe cited companies like Coinbase, which recently announced plans to reincorporate in Texas, as examples.
"I have heard from CEOs from across the country, and also they have said it in national papers and national news, that after SB 21, where the General Assembly tried to attack the business friendliness, they have started looking at every single decision that the General Assembly is starting to make about business requirements and business decisions."
Shupe also questioned why the special session was called, saying the projected $400 million loss is based solely on estimates.
"Delaware Economic and Financial Advisory Council (DEFAC), by their own rules, only looks at what the revenue loss could be, but doesn't look at the other side, the balance sheet of what revenue will be coming into the state of Delaware."
HB 255 now moves to the Delaware State Senate and has been assigned to the Senate Executive Committee for consideration.
