Why Should Delaware Care?
Last year’s first-in-a-generation property reassessment and its lasting fallout have reverberated across Delaware, particularly in New Castle County. Lawmakers introduced several tax reforms this past session, including one preserving the current split school tax rate system.
Gov. Matt Meyer allowed a property tax bill to take effect without his signature on Thursday, permitting school districts in New Castle County to continue taxing residential and business properties at different rates.
The bill follows statewide property tax reassessments completed in recent years that sparked an ongoing debate over how Delaware taxes land.
Sponsored by Rep. Kim Williams (D-Stanton), House Bill 462 took effect on Thursday and now extends a so-called split tax-rate system in New Castle County that lawmakers first approved in 2025.
The new law differs slightly from the 2025 version in that the tax rates on commercial properties, including apartments, are capped at 185% of the residential rate, rather than 200%.
Before the legislative session ended in June, lawmakers had also considered a separate bill, Senate Bill 350, that would have created additional categories of properties that could be taxed at different rates. If approved, that change could have addressed longstanding objections to the split tax rate from apartment owners and developers.
Meyer had urged lawmakers then to pass Senate Bill 350, arguing that apartments being taxed at a higher rate than single-family homes created a “gross inequity.” But the bill failed to progress to a full vote of either legislative chamber, likely due, in part, to its late introduction just days before legislators’ end of session.
Instead, House Bill 462 is the new law for New Castle County. In addition to preserving the split-rate tax structure, it also changes how school districts account for delinquent, or late, tax payments.
Previously, districts were required to add 10% to their tax rate to account for anticipated delinquencies. The new law allows them to add up to 10%.
Why did Meyer allows the bill to take effect?
Despite concerns about the bill, Meyer allowed it to take effect because school districts need a predictable law in place to set their tax rates for the coming school year, he said.
In a public letter issued Thursday, Meyer said allowing the bill to take effect would “avoid unnecessary disruption for schools and taxpayers alike.”
New Castle County school districts have delayed setting their 2026-27 tax rates while the county reviews certain commercial property assessments that some say were far too low. The county has until Sept. 30 to complete those reviews, after which school districts will receive updated information about their tax base.
Several districts have also warned that they may need to raise taxes to cover increasing special education costs.
The districts are expected to vote on their tax rates in October, with new property tax bills going out in November. The bills would then be due by Dec. 31.
But Meyer made clear that allowing House Bill 462 to become law does not mean he supports the tax structure it preserves. He noted that his main concern is that the bill continues to treat apartments and other rental properties as commercial properties, allowing them to be taxed at higher rates than homes.
“Those taxes do not simply disappear. They are reflected in higher rents, deferred maintenance, and fewer new housing opportunities for Delaware families,” Meyer said.
After New Castle County school districts’ adoption of split tax rates last year, apartment tax rates for schools increased by an average of 55%. Meanwhile, school tax rates for homeowners generally declined.
In some districts, Meyer wrote, a 4,000-square-foot, single-family home now carries a lower school tax burden than a 1,500-square-foot apartment.
In his letter, Meyer also reiterated his support for Senate Bill 350, which would have capped apartment tax rates for schools at 120% of the residential rate. He said that bill “offered a better solution” and would not have reduced school district revenue.
“When the General Assembly returns, I urge it to complete this work by recognizing apartments and rental housing for what they are: homes,” Meyer said.
