DOVER, Del. — Delaware democrats introduced new legislation Wednesday aimed at protecting the state from a projected $400 million budget shortfall caused by recent changes to the federal tax code.
House Bill 255, sponsored by Rep. Kerri Evelyn Harris and Sen. Bryan Townsend, would “decouple” Delaware’s tax code from specific provisions of the federal Internal Revenue Code to avoid automatically adopting retroactive corporate tax breaks passed under the One Big Beautiful Bill Act, or OBBBA.
Delaware, as a rolling conformity state, generally incorporates federal tax changes automatically unless the General Assembly acts to “decouple.” Without intervention, democrats say the state would face revenue losses of $222.8 million in fiscal year 2026, $107.4 million in fiscal year 2027, and $79.9 million in fiscal year 2028, according to state projections.
HB 255 does not eliminate deductions altogether. Instead, democrats say it maintains them but spreads the benefit over multiple years — mirroring the structure prior to the federal changes. Lawmakers say this move will preserve budget stability without raising taxes or slashing services.
“Every day, Delawareans are struggling to pay for housing, fill their gas tanks, afford a doctor’s visit, or buy their prescriptions,” said Rep. 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.”
Governor expresses support, Republicans question spending
Gov. Matt Meyer voiced support for the bill, calling it a necessary step to protect state finances. Republicans say 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.
"Comparing FY 2021 to FY 2025, spending increased by $2.4063 billion, or more than 53.2%," a release from Delaware House Republicans reads. "Creating a larger burden of ongoing expenses that budget writers need to factor in at the start of each budget cycle.
With the General Assembly set to return formally in January for the 2026 session, lawmakers say they acted early to prevent compliance issues, amended returns, and administrative burdens on the Division of Revenue. The bill requires a three-fifths majority vote in both chambers.
Bill heard Friday, Extraordinary Session on Nov 13
HB 255 will be heard by the House Administration Committee on Friday, Nov. 7 at 11:30 a.m. The General Assembly will return to Dover on Thursday, November 13 at 12 p.m. to discuss more potential legislative solutions.