Why Should Delaware Care?
Delaware lawmakers are set to return to session on Tuesday for the next six months, culminating in the passage of the state’s budget. In 2025, issues like big changes in property tax bills in New Castle County and rising health care costs have renewed discussions around affordability in the First State.
Delaware Gov. Matt Meyer and leaders in the state legislature said they view affordability as a key issue going into 2026, as elections loom and federal actions have threatened to upend large parts of the state’s budget.
At Spotlight Delaware’s second annual Legislative Summit on Wednesday, the leaders discussed a wide array of issues including Delaware’s tax brackets, health care, property reassessment and education.
Delaware lawmakers are set to return to Legislative Hall on Tuesday after a tumultuous year that saw multiple special sessions to address property tax woes and federal tax changes that reverberated through the state.
For Meyer, it will be his second year helming the state’s top office and an opportunity to implement some of his key agenda items.
Tax brackets changes?
Last year, lawmakers introduced a bill that would have created new income tax brackets for the state’s highest earners, which ultimately failed to see a vote on the floor.
Creating new tax brackets for the state’s highest earners is something Meyer had pushed for early in 2025 prior to his inauguration, and something he still supported at Wednesday’s Legislative Summit.
“It’s ridiculous in this state that people making $65,000 a year are paying the same tax rate as people making $6.5 million a year,” Meyer said during a fireside chat with Spotlight Delaware Editor-in-Chief Jacob Owens.
But in a separate panel discussion, leaders in Delaware’s statehouse discussed those same tax reforms, expressing some hesitation about passing them without further insight into their possible impacts. One of those leaders, Delaware House Speaker Melissa Minor-Brown (D-Delaware City), questioned the previous proposal because of the nominal tax breaks for Delawareans making less than $60,000.
The bill would have shifted more of the state’s personal income tax burden to higher earners while cutting taxes on the lowest earners. But the proposal failed to move forward, in part because the average savings to the lowest earners was between $15 and $52 a year.
Still, Minor-Brown agreed that those making more $60,000 should not pay the same as the state’s top earners, but said she would want to have experts weigh in on proposals.
“Until we have something on the table that makes sense, we’re going to have to wait,” Minor-Brown said.
House Minority Whip Jeff Spiegelman (R-Clayton) also questioned the reforms, saying they would impact businesses that would have to pay higher income taxes on the new tax brackets. Many small business owners report their business’s income on their personal income tax form, which could push more of them into the higher brackets.
Recent property reassessments that roiled New Castle County, inflation and the price of doing business, on top of an increased income tax burden, could impact a company’s desire to create more jobs, he added.
“Then we’re also turning to them and saying, ‘Please, please, please, hire people,’” Spiegelman said. “It’s the same argument that has been made again and again with Republicans and Democrats.”
What’s next on property reassessment?
The fallout in New Castle County from Delaware’s first-in-40-year property reassessment that caused firestorms at both the state and local levels also dominated the respective conversations with the governor and legislative leaders.
Senate President Pro Tempore David Sokola (D-Newark), currently the legislature’s longest serving member, said he tried to make property reassessments more frequent in 2000, but that effort failed.
Two decades later, a court ordered that Delaware must reassess properties, and that the state’s property tax system was unconstitutional, setting up the first reassessment in decades.
Following the reassessment in New Castle County, and the subsequent split tax rate passed by legislature in August meant to offset the massive tax increases on residents, Sokola said lawmakers will now have to weigh the future of those differential rates for businesses and residential properties.
“Now we have the hard part of figuring out, ‘OK, where do we draw the line?’” Sokola said. “And what size of a business might fall under a different category than it does right now.”
Either way, Sokola said he believes the recent uproar could have been avoided if legislation making reassessments more frequent had passed before 2023.
“This did not have to happen, and I hope to God it doesn’t happen again,” he said.
Senate Minority Whip Brian Pettyjohn (R-Georgetown) said that while Sussex and Kent counties did not see the drastic tax bill increases that New Castle County did, he still took some issue with the reassessment process.
He homed in on how the company that completed Delaware’s assessments, Tyler Technologies, and leaders are still unclear on the back-end work done to calculate the new property values.
“If we’re not able to see how they came up with these numbers that we know are flawed, then it’s really hard for us to move forward,” Pettyjohn said.
Affordability at the center
Meyer said that going into 2026, “affordability is key” when it comes to his policy agenda.
“We’re working in a K-shaped economy where working people are getting squeezed,” Meyer said.
While he did not reveal specific policies, Meyer said his office will look at housing, health care and education costs in the state.
He also discussed the state’s budget and keeping expenses and revenues in balance following the Delaware Economic and Financial Advisory Council’s (DEFAC) projected budget shortfall last October, and the subsequent action by the legislature to decouple parts of Delaware’s tax code from its federal counterpart to offset the projected losses.
He expressed a desire to trim spending in his first full recommended budget closer to DEFAC’s recommended benchmark rate — or the rate that independent experts believe state spending should be growing to meet higher costs and new needs.
In recent years, the annual budget has far exceeded those experts’ projections, although Delaware’s budget remains balanced, its AAA bond rating remains intact and the state holds hundreds of millions of dollars in two separate savings accounts.
But that need for balance, Meyer said, cannot come at the expense of removing important services that residents rely on.
“We have plentiful reserves to cushion us, so it’s not a problem,” Meyer said. “We don’t need to cut left and right, cut all these services, critical services for Delawareans to balance the budget.”