DOVER, Del. - A new bill introduced in the Delaware House of Representatives could alter how businesses and individuals deduct expenses on their state tax returns by breaking with recent federal tax changes.
House Bill 255, sponsored by Rep. Harris and backed by more than a dozen co-sponsors, seeks to decouple certain parts of Delaware’s tax code from the federal “One Big Beautiful Bill Act,” also known as OBBBA. The legislation was introduced Nov. 5.
Under current law, Delaware automatically adopts most changes to federal tax law unless lawmakers take specific action, says the General Assembly website. HB 255 proposes to keep some prior tax provisions in place, rather than fully adopting the more aggressive federal changes made under OBBBA.
The bill affects both corporate and personal income taxes. For corporations taxed separately, often referred to as “C corporations”, the bill would:
Preserve expensing rules for domestic research and experimental expenditures made between Jan. 1, 2022, and Dec. 31, 2025, using pre-OBBBA guidelines.
Remove Delaware from the federal rule allowing full expensing of certain business property acquired after Jan. 19, 2025.
Remove Delaware from the federal depreciation allowance for qualified production property.
For individuals with business income from S corporations or partnerships, changes would start Jan. 1, 2026. These include:
Ending full expensing for business property placed in service after Dec. 31, 2025.
Ending special depreciation allowances for qualified production property starting the same day.
The measure would not eliminate deductions for depreciation or expensing but adjusts how and when they can be taken. The bill would take effect as soon as it is signed into law.
If passed, HB 255 could have long-term implications for Delaware businesses, accountants, and individuals managing business income. The committee hearing date has not yet been announced.