Del. Gov. Meyer says state of the state strong despite revenue uncertainties

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Delaware Gov. Matt Meyer laid out his legislative priorities and his vision for the state’s future in a joint address to the General Assembly in Dover on Thursday.

He declared the state of the state was “strong,” despite Delaware predicting  slower future economic growth in future years that could force it to deplete money it has socked away.

Meyer gave his budget “reset” last month. He’s proposing a budget of nearly $6.6 billion for fiscal year 2026, up 7.4% from $6.1 billion for fiscal year 2025. The plan does not touch either the state’s Budget Stabilization Fund or the Rainy Day Fund, relying instead on new revenue from the change in tax brackets and an increase in fees.

The governor acknowledged the difficulty of crafting the state budget amid major policy shifts at the federal level, including funding freezes and cuts plus varying levels of tariffs.

“In building this year’s budget, our team is managing swings in revenue and expenses in the tens of millions of dollars — sometimes from one hour or day to the next, sometimes from one headline out of Washington to the next,” he said.

Under Delaware’s current income tax system, Delawareans making over $60,000 a year pay the state’s top tax rate of 6.6%. Meyer said he wants the new brackets to start at $125,000 of annual income, then go to $250,000 before topping out at $500,000. If the tax brackets plan gets approved by lawmakers, earnings between $60,000 and $125,000 would be taxed at a 6.6% rate. The tax rate would rise to 6.75% for income earned between $125,000 and $250,000, go to 6.85% for income earned between $250,000 and $500,000 and jump to 6.95% for wages over $500,000. The governor argued the plan would reduce taxes for most Delawareans.

Meyer’s budget depends on the additional $16.5 million in personal income revenue in 2026 and $35.2 million in 2027. His proposed cigarette tax of an extra $0.50 per pack would generate $8 million next year and $11.5 million in 2027. New revenue from other tobacco products would amount to $12.5 million over the next two years.