Delaware Division of Revenue
Tax Season Updates
Please allow 10-12 weeks for Personal Income Tax refunds requiring manual review or additional documentation.
Division of Revenue recently identified that our instructions related to itemized deduction limitations for state and local taxes (SALT) inadvertently omitted reference to federal provisions enacted under the Big Beautiful Bill.
Under federal law, these limitations apply to taxpayers with federal adjusted gross income exceeding $500,000, or $250,000 for those married filing separately.
Delaware forms and instructions have been updated to clarify alignment with current federal law regarding these limitations. We encourage all affected taxpayers and practitioners to review the revised materials to ensure accurate reporting.
We regret any confusion this may have caused and appreciate your understanding.
Delaware has decoupled from certain elements of the One Big Beautiful Bill Act (OBBBA)
- With the enactment of HB 255, Delaware has decoupled from the OBBBA's for the following:
- Retroactive treatment of unused capitalized qualified R&D expenditures for tax years 2022 to 2024.
- 100% bonus depreciation.
- 100% special depreciation allowance for Qualified Production Property.
- For more details, refer to TIM 2025-02
Other elements of OBBBA that impact Delaware income tax returns:
- Delaware conforms with Federal Adjusted Gross Income (AGI) and with federal definition of Itemized Deductions.
- For Tax Year 2025, Delaware’s Personal Income Tax calculation will pick up OBBBA changes that increased the cap on state and local tax (SALT) deductions to $40,000.
- OBBBA deductions for no tax on tips, overtime, and car loan interest are not defined federally as itemized deductions and will not flow through to the Delaware Personal Income Tax
- For the Corporate Income Tax, Delaware conforms at Federal Taxable Income (FTI) and, except for the decoupled provisions above, Delaware returns should reflect OBBBA changes to the definition of FTI.
