Delaware has no sales tax on most purchases

Delaware does not charge a state sales tax on retail goods or services. This applies to clothing, groceries, electronics, furniture, and nearly everything else you buy in a store. If you live in Delaware or make a purchase there, you will not see a sales tax line on your receipt.

However, Delaware does charge taxes on specific items and services. Gasoline has an excise tax. Hotel rooms are subject to a 8% tax. Rental cars carry a 7% tax. Meals at restaurants are taxed at 8%. These are not sales taxes in the traditional sense — they are targeted taxes on particular categories — but they do add to what you pay.

The lack of a general sales tax is one reason Delaware has become a shopping destination for people in neighboring states like Pennsylvania and Maryland, where sales taxes range from 6% to 8%. It is also why many businesses register their headquarters in Delaware, though that is a separate tax matter from what you pay at checkout.

Key Takeaways

  • Delaware has no state sales tax on clothing, groceries, household goods, or most other retail purchases.
  • Restaurants, hotel rooms, and rental cars are taxed at 8%, 8%, and 7% respectively, even though general sales tax does not exist.
  • Gasoline is subject to an excise tax that varies based on state fuel tax rates.
  • If you buy something in another state and bring it to Delaware, you do not owe Delaware sales tax on it.

What items and services are taxed in Delaware

Restaurant meals are taxed at 8%. This includes food and drinks consumed on premises or taken out. The tax applies whether you order at a counter, sit at a table, or use a drive-through. Prepared foods sold at grocery stores, bakeries, and delis are also subject to this 8% tax.

Hotel accommodations are taxed at 8%. This applies to overnight stays at hotels, motels, bed-and-breakfasts, and other lodging. The tax is calculated on the nightly room rate and is usually added to your bill at checkout or included in the quoted price.

Rental cars are taxed at 7%. This applies to short-term vehicle rentals from companies like Hertz, Enterprise, and Avis. The tax is based on the daily or weekly rental rate.

Gasoline and diesel fuel are subject to Delaware's motor fuel excise tax. The rate changes periodically based on state legislation. Unlike sales tax, which is a percentage of the price, excise tax is a fixed amount per gallon.

What is not taxed in Delaware

Clothing and shoes have no sales tax. This includes everyday wear, athletic gear, work uniforms, and accessories like hats and belts. The only exception is items that are not considered clothing — for example, a sports helmet might be taxed differently depending on how it is classified, but standard apparel is tax-free.

Groceries and food for home consumption are not taxed. This includes produce, meat, dairy, bread, canned goods, frozen foods, and beverages you buy to take home. The distinction is important: the same sandwich is taxed at 8% if you eat it at the restaurant but not taxed if you buy it from a grocery store deli and take it home.

Prescription medications are not taxed. Over-the-counter medications like pain relievers and cold medicine are also not taxed. Medical devices and supplies used for health purposes generally fall outside the tax system as well.

Most services are not taxed. Haircuts, car repairs, plumbing, electrical work, and professional services do not carry a sales tax. The 8% tax on restaurants and the 8% tax on hotels are exceptions to this rule, not the standard.

How Delaware's tax system compares to neighboring states

Pennsylvania charges 6% sales tax on most goods and services, including clothing and groceries. Maryland charges 6% on most purchases but exempts clothing and groceries. New Jersey charges 6.625% and also exempts clothing and groceries. Delaware's zero sales tax on these items makes it a lower-cost option for major purchases.

However, Delaware's 8% tax on restaurant meals is higher than Pennsylvania's 6% and Maryland's 6%. If you eat out frequently, this difference can offset the savings from no clothing tax. The 8% hotel tax in Delaware is also higher than what you would pay in some neighboring states.

For someone living near the Delaware border, the decision to shop in Delaware versus a neighboring state depends on what you are buying. Clothing and groceries favor Delaware. Restaurant meals and hotel stays may favor the neighboring state, depending on the specific rates there.

Online purchases and tax obligations

If you buy something online from a retailer located outside Delaware and have it shipped to a Delaware address, you do not owe Delaware sales tax. This is because Delaware has no sales tax to collect. Some states require residents to pay "use tax" on out-of-state purchases, but Delaware does not have a use tax.

If you buy something online from a Delaware retailer, there is no sales tax added to your order. If you buy from a retailer in another state and have it shipped to an address in that state, you owe that state's sales tax — not Delaware's, because Delaware has none.

The key rule is simple: tax follows the location where the item is delivered, not where you live or where the seller is located. Since Delaware has no sales tax, purchases delivered to Delaware addresses are not subject to state sales tax.

Frequently Asked Questions

Do I pay sales tax if I buy something in Delaware and take it to another state?

No. You pay Delaware's tax (or lack thereof) at the point of purchase in Delaware. Once you leave Delaware, you do not owe tax to another state on something you already bought and paid for. However, if you buy something in another state and bring it to Delaware, you do not owe Delaware tax either, because Delaware has no sales tax.

Is there tax on used items or secondhand purchases?

Used goods sold by individuals are not taxed anywhere. Used items sold by businesses or through platforms like eBay or Facebook Marketplace depend on the seller's location and the platform's policies. In Delaware specifically, used goods sold by a business would not be subject to sales tax because Delaware has no sales tax, though the 8% restaurant or hotel tax would still apply to those specific categories.

Do I have to pay tax on services like haircuts or car repairs in Delaware?

No. Most services in Delaware are not taxed. Haircuts, auto repair, plumbing, electrical work, and professional services do not carry a sales tax. The exceptions are restaurant meals (8%) and hotel rooms (8%), which are taxed even though they are technically services.

What about tax on digital products like apps or e-books?

Digital products purchased by Delaware residents are generally not subject to Delaware sales tax, because Delaware has no sales tax. However, if you purchase a digital product from a seller in another state, that state's tax rules may apply depending on where the seller is located and that state's tax laws. This varies by state and by seller.

Is the 8% restaurant tax the same everywhere in Delaware?

Yes. The 8% tax on restaurant meals applies statewide in Delaware. Some cities or counties may have additional local taxes on top of the state rate, but the base state restaurant tax is 8% everywhere in the state. Check your receipt to see if any local tax has been added.