By James Bush and Melissa Hopkins  

Governor Matt Meyer has called a special session for November 13, 2025, to address a fiscal issue that could significantly affect Delaware’s budget, and by extension, the nonprofit sector. At the heart of this session is a single question:  Should Delaware “decouple” its state tax code from recent federal corporate tax changes? 

Understanding the Issue 
Earlier this year, Congress passed H.R. 1 the One Big Beautiful Bill Act (OBBBA), a sweeping federal tax package that includes major corporate cuts. One major provision allows companies to immediately deduct the full cost of new investments, such as equipment or buildings, in the first year, a process called bonus depreciation. 

The law also reinstates immediate deductions for research and development (R&D) costs, including retroactive claims for the past three years. While intended to spur corporate investment, these changes reduce taxable income and state tax revenue for states linked to the federal code. 

Delaware is one of those states. Our tax system follows the federal rules for simplicity, any federal tax change automatically flows through unless the state acts to opt out. 

Why It Matters for Delaware’s Budget 
According to the Delaware Economic and Financial Advisory Council (DEFAC), remaining coupled could cost Delaware an estimated $350 million in corporate income tax revenue over the next two years, roughly about 5% of the entire state budget. 

DEFAC has already lowered revenue projections by $155 million this year and $169 million next year in anticipation. Without intervention, this shortfall could disrupt funding for schools, healthcare, housing, partnerships with nonprofit service providers and investments into Grant-in-Aid. 

What Is “Decoupling”? 
Decoupling means Delaware would opt out of certain federal tax provisions, in particular bonus depreciation and possibly the expanded R&D deductions, to preserve state revenues. 

Twenty-four other states have already taken this step.  Delaware remains one of the few Northeastern states still coupled, risking substantial revenue loss if it does not act. 

Legislative and Political Perspectives 
Speaker Minor-Brown and Senate President Pro Tempore David Sokola have expressed support for decoupling, emphasizing fiscal responsibility and long-term budget stability. 

Opponents argue the problem is overspending, not lost revenue. They note Delaware still projects a $46 million surplus and warn that decoupling could be perceived as a corporate tax increase, requiring a three-fifths majority vote to pass. 

Why It Matters for Nonprofits and Philanthropy 
For nonprofits, this debate is not about tax code mechanics, it is about funding stability. 

If Delaware fails to decouple, the resulting shortfall could mean: 

• Reduced or more significantly delayed payments on existing state contracts. 

• Fewer grant opportunities for community-based programs; and 

• Greater demand on philanthropy to fill service gaps for programs in housing, food security, mental health, and workforce development. 

When state funding becomes unpredictable, nonprofits must serve more people with fewer resources. Decoupling helps ensure predictability and equitable support for vital programs. 

Decoupling also presents an opportunity to modernize Delaware’s tax code to better reflect community priorities. One option would be to establish a state-level charitable gift deduction, creating a direct incentive for individuals and businesses to invest in the work of Delaware’s nonprofits. By aligning fiscal responsibility with philanthropic encouragement, Delaware could strengthen both its budget stability and its culture of giving. 

Looking Ahead 
Governor Meyer’s call for a special session underscores the urgency of this decision. While decoupling may sound technical, it raises a core question: Should Delaware protect public revenues for shared benefit, or let federal corporate tax cuts reduce its ability to invest in people and services? 

As deliberations unfold, Delaware’s nonprofit and philanthropic leaders will be watching closely, and advocating for a balanced, transparent solution that sustains community well-being. 

DANA’s Perspective 
At DANA, the Delaware Alliance for Nonprofit Advancement, we believe that strong public investment is essential to a thriving nonprofit sector and a healthy Delaware economy. Policy decisions that affect state revenues directly influence the ability of nonprofits to deliver the services our communities rely on every day. 

DANA will continue to monitor this issue and share updates as the legislative process moves forward. 
To learn more about DANA’s public policy priorities or to join our advocacy network, visit: 
delawarenonprofit.org/policy.