Is Delaware Losing Its Business Edge?
By: Kathleen Rutherford, Guest Contributor
For decades, Delaware has built its reputation as one of America’s most business-friendly states, thanks to its respected Court of Chancery, predictable corporate laws, and business climate that has attracted more than two-thirds of Fortune 500 companies. Corporate franchise taxes and related fees generate roughly one-third of the state’s operating revenue, helping fund essential services. However, maintaining that competitive edge requires constant attention. As states aggressively compete for jobs and investment, CNBC’s 2026 America’s Top States for Business rankings placed Delaware 32nd overall, behind Pennsylvania (13th), New York (18th), Connecticut (23rd), and New Jersey (31st), raising important questions about whether Delaware is losing ground.
That ranking should be a wake-up call.
Taxes Matter
Delaware imposes an 8.7% corporate income tax, one of the highest state corporate income tax rates in the nation. In addition, Delaware is one of the few states that also levies a gross receipts tax on business revenue rather than profits, meaning companies can owe taxes even when they are operating at a loss. Combined with franchise taxes and other business fees, Delaware’s overall tax structure can make it a more expensive place to do business than many competing states that are actively courting employers with lower taxes and fewer costs.
Affordable Housing Is an Economic Issue
Housing affordability isn’t just about helping families—it directly impacts Delaware’s economy. Delaware has the highest real estate transfer tax in the nation, increasing the cost of buying and selling homes, while renters face some of the highest housing costs in the country, with Delaware ranking 16th nationally for average rent. When teachers, nurses, police officers, tradespeople, and young professionals cannot afford to live near where they work, employers struggle to recruit and retain workers. Businesses face higher turnover, longer hiring times, and increased labor costs. The National League of Cities calls housing affordability an “invisible tax” on workforce development because it makes it harder for employers to build and maintain a reliable workforce. If Delaware wants businesses to grow and attract new investment, it must also ensure that the people who power those businesses can afford to live here.
Workforce Readiness Matters
Businesses also need confidence that today’s students will become tomorrow’s workforce.
According to Delaware Department of Education data, only 41% of students in grades 3 through 8 met English Language Arts proficiency standards during the most recent assessment cycle. Math proficiency rates remain below pre-pandemic levels as well.
No state can attract long-term investment without developing a skilled workforce. Companies considering expansion don’t just ask about tax rates, they ask whether qualified workers will be available five and ten years from now.
Delaware’s Greatest Strength Is Being Tested
Perhaps Delaware’s greatest competitive advantage has always been its corporate legal system. For decades, companies incorporated here because Delaware offered predictability, stability, and legal certainty.
That advantage is now being tested. A growing number of major companies have moved—or announced plans to move—their incorporations to states like Texas and Nevada, citing changes in Delaware corporate law, increased shareholder litigation, and a more favorable business climate elsewhere. Even Exxon Mobil considered Delaware before unanimously choosing Texas.
This matters because Delaware collects approximately $2.2 billion annually from corporate franchise taxes and related revenues. If more companies continue leaving or choosing other states to incorporate, the financial consequences won’t just affect corporations—they could affect every Delaware taxpayer.
The Bottom Line
Delaware still has tremendous strengths, including its world-renowned Court of Chancery, strategic East Coast location, and long history as the nation’s corporate capital. But history alone won’t keep us competitive. To regain our state’s position as a top business destination, Delaware must improve tax competitiveness, address housing and workforce challenges, and preserve the stability of its corporate legal system. A stronger business climate means more jobs, greater opportunity, and the revenue needed to support essential public services.
Kathleen Rutherford is a government relations and advocacy professional with experience in lobbying, public policy, and strategic communications in Delaware and Washington, D.C. Rutherford Consulting, Inc. provides policy analysis, advocacy strategy, and communications support that connects legislative decisions to real-world economic and community impacts.