Court Ruling on
HB-242 Challenge
Case DecidedVice Chancellor Lori Will - October 30, 2025
Final Ruling
Vice Chancellor Lori Will entered judgment for the defendants on all counts, finding that House Bill 242 and its implementation do not violate the United States Constitution, the Delaware Constitution, or state statutes.
"For the reasons explained below, I conclude that it does not. Judgment is entered for the defendants on all counts."
Count I: Uniformity Clause (Rejected)
The court found that HB242 does not violate Delaware's Uniformity Clause. The legislature has the right to classify property for taxation purposes, and the distinction between residential and non-residential properties is reasonable and constitutional.
Count II: Retroactive Taxation (Rejected)
The court ruled that Delaware's prohibition on retroactive taxation applies only to personal income taxes, not property taxes. HB242 levies an ad valorem property tax, not an income tax.
Count III: Referendum Requirement (Rejected)
HB242 functions as a specific, time-limited exception to the general referendum requirement. The statute's "notwithstanding" clause and ten-day deadline made compliance with both HB242 and the referendum process impossible, so HB242 governs.
Count IV: Fair Market Value (Rejected)
Property assessments remain valid as of the July 1, 2024 base year. Events after that date, including the passage of HB242, are legally irrelevant to the validity of assessments set according to the statutory base year.
Count V: Revenue Neutrality (Rejected)
School boards complied with HB242's revenue neutrality requirement based on the data available when they set tax rates. The statute required a projection, not perfect accuracy, and subsequent corrections to classification errors do not violate the law.
Count VI: Due Process (Rejected)
Post-deprivation remedies, including the County's new administrative policy and judicial review, provide adequate due process. Property owners maintain meaningful opportunities to challenge classifications and seek refunds.
HB-242 is valid: The dual tax rate system distinguishing between residential and non-residential properties is constitutional and will be implemented for the 2025-2026 tax year.
Tax bills will be issued: New Castle County can now proceed with issuing supplemental school tax bills reflecting the higher non-residential rates.
Classification corrections allowed: The County may correct property classification errors, and affected property owners will have opportunities to challenge those corrections.
One-year law: This ruling applies only to the 2025-2026 tax year, as HB-242 is a temporary, one-year measure.
Case Number
2025-1031-LWW
Court
Delaware Court of Chancery
Judge
Vice Chancellor Lori Will
Decision Date
October 30, 2025
Opinion Length
58 pages