Delaware Property Tax Reassessment Sparks Legal Battle Between Landlords and School Districts

New Castle County, Delaware — A controversial property tax reassessment has triggered a lawsuit pitting landlords, property associations, and hotel owners against county officials, state entities, and school districts in what could become a pivotal case for commercial property owners across Delaware.

The Heart of the Dispute

At the center of the controversy is a new state law that permits school districts to implement split tax rates—charging different rates for residential versus non-residential properties—following the county’s property reassessment. Critics argue this legislative change unfairly shifts the tax burden onto commercial property owners and, ultimately, low-income renters who may face increased housing costs.

What Both Sides Are Saying

Plaintiffs in the lawsuit contend that the split tax rate structure disproportionately impacts commercial property owners and will result in higher costs for vulnerable renters who can least afford them. They’re challenging the fairness and legality of a system that treats different property types unequally.

Defendants, including county and school district officials, maintain that the new approach provides necessary relief for residential homeowners while arguing that commercial operators have greater financial capacity to absorb tax increases than individual homeowners.

Timeline and What’s Next

Vice Chancellor Lori Will is presiding over the case and is expected to issue a ruling by October 30, 2025. The decision could have far-reaching implications for property tax policy throughout the state.

Meanwhile, recognizing widespread confusion among taxpayers, New Castle County has extended the payment deadline to November 30, giving property owners additional time to understand their new tax obligations.

Why This Matters

This case highlights the delicate balance municipalities face when restructuring tax systems—attempting to provide homeowner relief while maintaining revenue streams without unfairly burdening commercial interests. The outcome could set precedent for how other Delaware counties and municipalities approach property tax reform in the future.

Last updated: October 4, 2025