FOR IMMEDIATE RELEASE | November 19, 2025
Contact: Sarah Fulton (302) 401-1114
DOVER — The Senate passed legislation on Thursday afternoon that would protect state revenues by “decoupling” Delaware’s tax code from two specific provisions of the federal Internal Revenue Code.
House Bill 255 was introduced following the October meeting of the Delaware Economic and Financial Advisory Council (DEFAC,) during which it was reported that Delaware could face a drop in revenue of more than $400 million over the next three years, after Congress passed HR1 earlier this year. The “One Big Beautiful Bill Act” (OBBBA), which made significant changes to the federal tax code, allows large companies to fully write off the full cost of research, experimental activities, and certain property investments, rather than spreading those corporate tax benefits over multiple years.
These changes, some of which are retroactive for businesses beginning in tax year 2022, would result in a loss of state revenues that were allocated on a bipartisan basis when the General Assembly approved Delaware’s operating budgets. Without passing HB 255, the state stood to see revenue drop by $222.8 million in fiscal year 2026, $107.4 million in fiscal year 2027, and $79.9 million in fiscal year 2028.
“When tax policy made at the federal level automatically threatens critical services we provide as a state government to the people of Delaware — funding for our teachers, our first responders, our infrastructure, and more — we have a responsibility to act. And when we learned federal policy was offering retroactive tax incentives going back as many as five fiscal years, it became clear we had to pass legislation that would protect our budget,” said Sen. Townsend, prime sponsor of HB 255. “This is not a hasty attempt to forge new tax policy. In fact, the legislation preserves R&D tax incentives for Delaware companies going forward. Our efforts to decouple are simply an effort to retain the revenues we’ve already budgeted in a way that will have a minimal impact on the vast majority of Delaware businesses, while investing in programs that are critical to Delaware families.”
Put simply, HB255 requires spread-out tax benefits for two types of large businesses across the country: those who had made pre-2025 R&D investments and then sold goods or services in Delaware, and those who invest more than $4 million annually in certain kinds of equipment and then sell goods or services in Delaware. No small businesses will be affected, and all businesses will have the opportunity to spread favorable tax treatment out across multiple years.
“Delaware’s historic ability to marry complex tax policy with responsible budgeting is a hallmark of our great State. It’s why we’ve been able to remain an attractive place to do business, while maintaining a AAA bond rating, and having one of the lowest household tax burdens in the entire country,” said Sen. Mantzavinos, who chairs the Senate’s Business, Banking & Insurance Committee. “While the leadup to today’s vote was steeped in partisan rhetoric, the reality is that many of us were working hard behind the scenes to ensure this legislation struck the right balance for our State. The version of HB 255 we passed today protects our budget and the commitments it represents to the people of Delaware, while ensuring we are exempting small businesses and retaining our reputation as an incubator for innovation.”
“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, House Prime sponsor of HB 255. “If we failed to decouple, we would be silently allowing large corporations to pull critical funding away from the services that keep our state strong. Instead, we chose to act. A stable budget is good for business and good for the people of Delaware, because it protects the schools, public safety, and community services that make this state a place where families can thrive and businesses can grow.”
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