DOVER, Del. - The Delaware House of Representatives passed a bill Thursday aimed at shielding the state from a projected $400 million budget shortfall tied to recent changes in federal tax law.
House Bill 255, sponsored by Rep. Kerri Evelyn Harris, would temporarily decouple Delaware’s tax code from specific provisions of the Internal Revenue Code introduced through the “One Big Beautiful Bill Act,” or OBBBA.
Delaware automatically conforms to most federal tax changes unless state lawmakers act to decouple from them. Under the new federal law, businesses can now fully and immediately deduct expenses related to research, experimentation and property purchases. Previously, these deductions were spread over several years.
Without action, Delaware officials say the shift would drain hundreds of millions from the state’s budget, including: $222.8 million in fiscal year 2026, $107.4 million in 2027 and $79.9 million in 2028.
“Every day, Delawareans are struggling to pay for housing, fill their gas tanks, afford a doctor’s visit, or buy their prescriptions. 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,” said Rep. Kerri Evelyn Harris.
An amendment to the bill requires the Delaware Department of Finance to report to the Delaware Economic and Financial Advisory Council in December 2027 with updates on the law’s impact, changes to federal tax law, and recommendations for future policy.
While the legislation is supported by Democrats, House Republicans strongly opposed HB 255. In a statement, they argued the bill jeopardizes Delaware’s long-standing reputation as a "destination for incorporations."
"Enacting HB 255 will make our state less attractive for developing domestic enterprises and give corporate leaders who are uncertain about retaining their presence here another reason to relocate," the House Republican Caucus wrote. The caucus cited recent moves by high-profile companies such as Coinbase, which announced it would leave Delaware and incorporate in Texas. The company's chief legal officer cited Delaware’s unpredictable business climate as the top reason for the company's decision, according to the caucus.
Republicans also criticized the timing and process of the vote, which took place during an extraordinary session and included remote voting to ensure its passage.
The legislation now heads to the Senate.