DOVER, Del. - Democratic lawmakers in Dover have introduced new legislation designed to protect against a looming $400 million shortfall they say would be caused by the Trump Administration’s recently passed “One Big Beautiful Bill Act.”
According to the House Majority Caucus, Delaware’s tax code is automatically updated to reflect changes to federal tax law. Trump’s OBBBA, according to democrats, recently changed provisions to the federal Internal Revenue Code that would allow businesses to immediately write off certain costs such as research and property investments instead of spreading the tax deductions over years.
Those new federal provisions, automatically applied to Delaware’s tax code as well, would be retroactive for businesses spanning back to 2022 and all tax payers in 2025, according to lawmakers. The House Majority Caucus says the immediate tax breaks would cause a projected $400 million state revenue loss over the next few years.
To combat the expected deficit, Delaware Rep. Kerri Evelyn Harris and Sen. Bryan Townsend have sponsored House Bill 255. In order to keep the OBBBA tax changes from automatically applying to Delaware, lawmakers say they can specifically target certain federal provisions to “decouple” from, ensuring Delaware’s tax code does not reflect the new tax breaks.
“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. “Instead of working to address these problems, Washington Republicans passed a tax plan that gives even more to the wealthy and big corporations while working people are left footing the bill.”
“Every Delaware tax dollar that goes to these corporate giveaways is a dollar that could have helped a child learn, kept a neighborhood safe, or supported a family in crisis,” Harris continued.
“Decoupling is how we make sure Delawareans get their fair share. It is time, and it is the right thing to do, to lift our people and build an economy that works for everyone.”
Lawmakers say HB 255 would not eliminate write-offs for property depreciation or expensing, but would adjust the timing of the deductions over a multi-year period instead of a significant, immediate tax break.
The bill was voted out of the House Administration Committee Friday in a 3-1 vote, with one member absent.
While the Democrats, including Governor Matt Meyer, pointed solely to the OBBBA as the cause of the potential future budgetary woes, Republicans placed blame on the majority party’s budget.
“While criticizing the president and Congress, the governor did not detail the budgetary impacts of spending decisions made by his administration, the previous administration, or those of the House and Senate Democrats who control the state budget-writing process,” the State House of Representatives Republican Caucus said in a statement on Oct. 31.
Rep. Jeffrey Spiegelman (R-District 11) was the sole “no” vote against moving the bill out of committee. While he acknowledged the potential impacts, he said there wasn’t enough clarity to support it.
“I went no, because here we are in special session. Here we are in mid-November rather than our normal session, January to June. And so it’s kind of — I wasn't filled with enough confidence to go yes."
He also raised concerns about state spending, questioning whether the measure would be considered in a stronger budgetary year.
“The question is, would we be doing this if we were in a really good budgetary year? The answer is, I don't know. At the same time, would we be here in mid-November if it weren't for a change at the federal level? I don't know the answer to that."
With the OBBBA taking effect on Jan. 1, Governor Meyer moved quickly to call a special legislative session before the end of the year. On Friday, Oct. 7, the House Administration Committee advanced the bill to the consideration of the full House of Representatives.
The House is expected to convene on Thursday, Nov. 13 to consider the the bill. HB 255 will require a three-fifths majority vote in both chambers to pass.
