Delaware taxpayers use earlier federal tax rules for selected costs and property

For corporate income tax, the law provides an adjustment for domestic research costs that keeps the earlier federal tax treatment. It covers domestic research and experimental costs made after December 31, 2021, and on or before December 31, 2024. The adjustment keeps expensing under federal rules in place before the 2025 federal law. This section took effect upon enactment and applies to tax years beginning on or after January 1, 2022.

For corporate income tax, the law provides adjustments that keep earlier federal depreciation and amortization treatment for certain property. Other qualifying property must be acquired and placed in service after January 19, 2025, and before January 1, 2031. Qualified production property must be placed in service before January 1, 2031. Other property must otherwise qualify for immediate expensing under the cited federal law; the adjustment keeps the earlier federal depreciation and amortization rules. Qualified production property is defined by the cited federal law. This section took effect upon enactment and applies to tax years beginning on or after January 1, 2022.

For individual income tax, the law provides adjustments that keep earlier federal depreciation and amortization treatment for certain property. Other qualifying property must be acquired and placed in service after December 31, 2025, and before January 1, 2031. Qualified production property must be acquired and placed in service within those same dates. Other property must otherwise qualify for immediate expensing under the cited federal law; the adjustment keeps the earlier federal depreciation and amortization rules. Qualified production property is defined by the cited federal law and must be acquired and placed in service within the stated dates. This section takes effect January 1, 2026.

The Department of Finance must report to the Delaware Economic and Financial Advisory Council on the tax changes' effect on state revenue. The report covers the law's effects on state revenue and federal bonus depreciation changes and dates. The report must update the council on federal bonus depreciation changes and sunset dates, and include recommendations and options about continuing the law's depreciation provisions. The department must send copies to the Secretary of the Senate and the Chief Clerk of the House for distribution to legislators. The Department of Finance must present the report at the council's December 2027 meeting.