Delaware Supreme Court clears way for New Castle County homeowners to pay lower taxes

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New Castle County homeowners are set to pay lower property taxes after months of legal fights over whether a law providing tax relief was constitutional.

Apartment trade organizations and mobile home operators who sued the state, county and local school districts lost for the second time as the Delaware Supreme Court on Wednesday sided with an earlier decision by the state’s Chancery Court.

New Castle County’s once-in-40-year reassessments dramatically shifted the tax burden from commercial properties to residential, sparking a fierce public backlash. That prompted Delaware lawmakers to pass House Bill 242 during an August special session, which allows New Castle school districts to set a higher tax rate for commercial properties for the 2025-2026 tax year. The county and the city of Wilmington also used split rates for this year’s property tax bills.

The landlord associations filed suit in September and Chancery Court Vice Chancellor Lori Will heard the case last month.

During Monday’s Supreme Court hearing, the trade groups argued that the law — and the way the county is implementing it — was unconstitutional because it violated the uniformity clause of the state constitution and flouted the legislation’s revenue-neutral requirement.

Supreme Court Chief Justice Collins Seitz, who authored the opinion, said the Chancery Court was right to dismiss the plaintiffs’ claims.

Vice Chancellor Will said state lawmakers could rebalance the tax burden of residential and nonresidential properties as long as it was reasonable. Seitz concurred.

“In evaluating a classification’s reasonableness, we do not second-guess the General Assembly’s judgment,” he wrote. “The wisdom of that policy judgment is not ours to assess.”

Plaintiffs also said the county’s revelation that it has to reclassify hundreds of properties will give the six New Castle County school districts a $4 million windfall, thus violating the law’s mandate that the revenue projected to be collected from the new rates cannot exceed the total amount of revenue a district was projected to originally bring in.

This claim relied heavily on the interpretation of the word “projected.”

The chief justice said Will correctly reasoned that projected revenue is not the same as actual revenue in rejecting this argument.

“We are unpersuaded that the County’s classification-error correction and its effect on revenue projections violates the statute,” Seitz’s opinion said.

New Castle County school districts issued new tax warrants after the passage of HB 242, raising tax rates for nonresidential properties 35% to 80% higher, while lowering residential properties’ rates. Barring any further legal maneuvering, New Castle County officials have said they plan to send out the new tax bills around Nov. 18.

In a statement, New Castle County Executive Marcus Henry said he was pleased with the court’s ruling.

“With this final determination, we can now move forward with issuing school and property tax bills,” he said.

State lawmakers are halfway through the process of approving legislation that would extend the due date for county property owners from Nov. 30 to Dec. 31. The state Senate has already approved the measure and the House is set to vote on it Thursday.