Governor Matt Meyer signed House Bill 255 (as amended) on Wednesday, shortly after the Senate approved the measure in a contested vote.
The House of Representatives had approved the bill on a split vote last week.
At issue was the impact on Delaware from federal tax changes signed into law in early July. Our state, like all others, links portions of its tax laws to the federal code, so decisions made in the nation’s capital can affect Delaware collections.
The new state statute breaks links to selected provisions of the federal law intended to encourage business investments in research and development and production improvements. The changes would have given business owners greater flexibility in claiming deductions for these expenses and made some of these favorable terms retroactive.
The Delaware Division of Revenue had maintained that if no action were taken, Delaware would have lost a total of $410 million in revenue over three years, with the majority of that ($223 million) occurring in the current fiscal year.
However, that number did not account for the state’s other revenue streams, making the potential reduction appear to have a much larger impact.
The total revenue state revenue estimate for the current fiscal year, released by the nonpartisan Delaware Economic and Financial Advisory Council (DEFAC) last month, tells a different story. It forecast a reduction of about $98 million, less than half the figure cited by the Meyer administration to make its case for a crisis that required urgent action.
To put that figure into context, $98 million is less than 1.5% of the FY 2026 state operating budget of $6.58 billion and well within the buffer the state builds into every budget to account for revenue fluctuations.
House and Senate Republicans, all of whom opposed House Bill 255, argued that calling the legislature back into extraordinary session to pass the decoupling legislation was needlessly reactionary. They noted that the next state budget will not take effect until July 1 and that five of the six annual revenue estimates on which the state bases its spending have yet to be made.
Opponents also noted that the state’s business reputation, which accounts for revenue streams that pay for a third of the budget, has been undermined recently, with companies such as Tripadvisor, Dropbox, Andreessen Horowitz, The Trade Desk, Coinbase, and Neuralink leaving Delaware to incorporate elsewhere. They say the impulsive enactment of HB 255 will further erode confidence in Delaware as a stable, business-friendly venue, while costing companies operating here funds they could have used to grow and create jobs.
Also expressing opposition to the bill were: the Delaware State Chamber of Commerce, the New Castle County Chamber of Commerce, the Delaware Business Roundtable, the Delaware Society of CPAs, DelawareBio, former Democratic State Representative Quin Johnson (a past chair of the committees that drafted the State of Delaware’s operating and capital budgets), and former Delaware Secretary of Finance Rick Geisenberger.
