Delaware Has a State Income Tax, But the Rate Depends on Your Income
Yes, Delaware charges a state income tax. Unlike some states that have no income tax at all, Delaware taxes wages, salaries, and other earned income. The tax rate is progressive, meaning it increases as your income goes up. For 2024, rates range from 2.2% on the lowest bracket to 5.75% on the highest, with six tax brackets in between.
Delaware also taxes capital gains, dividends, and interest income, though some types of retirement income receive preferential treatment. If you work in Delaware or live there, you will owe state income tax on most forms of income. The state does not tax Social Security benefits, and certain retirement income from pensions and IRAs may be partially or fully excluded depending on your age and total income.
Key Takeaways
- Delaware's state income tax ranges from 2.2% to 5.75% depending on your income level, with six tax brackets between the lowest and highest rates.
- You owe Delaware income tax if you live in the state or work there, on wages, salaries, capital gains, and most other income sources.
- Social Security benefits are not taxed by Delaware, and some retirement income from pensions and IRAs may be excluded if you meet age and income requirements.
- Delaware taxes both residents and nonresidents who earn income within the state, so working in Delaware means filing a state return even if you live elsewhere.
Delaware's Tax Brackets and Rates for 2024
Delaware uses six tax brackets. The lowest bracket starts at 2.2% on income up to $2,000 for single filers (or $4,000 for married filing jointly). Each bracket increases incrementally until the top rate of 5.75% applies to income over $60,000 for single filers (or $80,000 for married filing jointly). These brackets adjust slightly each year for inflation, so the exact dollar thresholds change annually.
The brackets apply to your taxable income, not your gross income. You can reduce taxable income by claiming the standard deduction (which varies by filing status) or by itemizing deductions if that yields a larger reduction. Delaware also allows a personal exemption of $110 per person for 2024, which further lowers your taxable income before the tax rate is applied.
What Income Is Subject to Delaware Tax
Delaware taxes wages, salaries, tips, and self-employment income. It also taxes interest and dividend income, capital gains from the sale of investments, rental income, and income from business or professional services. If you receive a 1099 form from a client or contractor, that income is taxable in Delaware.
Some income sources are excluded or partially excluded. Social Security benefits are never taxed by Delaware. Pension income and distributions from traditional IRAs may be excluded if you are age 60 or older and meet income limits. Military retirement pay is also excluded. Unemployment benefits are taxable in Delaware, as are most forms of government assistance. If you are unsure whether a specific income source is taxable, the Delaware Division of Revenue website lists the treatment of common income types.
Filing Requirements and Deadlines
You must file a Delaware state income tax return if your income exceeds the filing threshold for your age and filing status. For 2024, a single person under age 65 must file if gross income is over $12,950. The threshold is higher if you are age 65 or older, and it is higher still for married couples filing jointly. If you are self-employed, you must file if your net self-employment income is $400 or more, regardless of other income.
Delaware state income tax returns are due on the same date as federal returns: April 15 of the following year. You can request an extension to October 15 by filing Form 4868 with the IRS; the federal extension automatically extends your Delaware filing deadline as well. If you owe taxes and do not pay by April 15, interest and penalties begin to accrue, even if you filed an extension.
How Nonresidents and Part-Year Residents Are Taxed
If you do not live in Delaware but work there, you owe Delaware income tax on the wages you earn within the state. You will file a nonresident return reporting only Delaware-source income. Some states offer a credit for taxes paid to another state to prevent double taxation, but you should verify whether your home state offers this credit.
If you moved to or from Delaware during the year, you file as a part-year resident. You report income earned while you were a Delaware resident on the Delaware return, and income earned after you left is not subject to Delaware tax (though it may be taxable in your new state). The key date is when you establish or abandon residency, which is usually the date you move, not the date you change your driver's license or voter registration.
Tax Credits and Deductions Available in Delaware
Delaware offers several tax credits that can reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and is calculated based on your federal EITC. Delaware also offers a property tax credit for homeowners and renters with low incomes, and a dependent care credit for child care expenses. Some credits are refundable, meaning you can receive money back even if you owe no tax; others reduce your tax bill to zero but do not generate a refund.
On the deduction side, you can claim either the standard deduction or itemized deductions, whichever is larger. Delaware's standard deduction is lower than the federal standard deduction, so some taxpayers who do not itemize federally may find it worthwhile to itemize on their Delaware return. You can also deduct contributions to a traditional IRA (subject to income limits if you are covered by a workplace retirement plan) and certain education-related expenses.
Where to File and Get Help
Delaware state income tax returns are filed with the Delaware Division of Revenue, not with your local government. You can file by mail, by electronic filing through a tax software provider, or through a tax professional. The Division of Revenue website (dnrec.delaware.gov/revenue) provides forms, instructions, and a list of free tax preparation sites if your income is below a certain threshold.
If you have questions about your specific tax situation, you can contact the Division of Revenue by phone or email. Response times vary, but the division typically answers questions within one to two weeks. If you disagree with a tax assessment or audit result, you have the right to appeal through the Division's administrative process before pursuing legal action.
Frequently Asked Questions
Do I have to pay Delaware income tax if I work in Delaware but live in another state?
Yes. Delaware taxes nonresidents on income earned within the state. You file a nonresident Delaware return reporting only your Delaware wages. Your home state may also tax that same income, but most states offer a credit for taxes paid to another state to prevent double taxation. Check your home state's rules.
Is Social Security taxed in Delaware?
No. Delaware does not tax Social Security benefits at all, regardless of your total income or filing status. If Social Security is your only income, you will not owe Delaware state income tax. Other income sources may still be taxable.
What if I moved to Delaware partway through the year?
You file as a part-year resident and report only income earned while you lived in Delaware. Income earned before you moved is taxable in your previous state, not Delaware. The key date is when you physically moved, not when you changed your address with the DMV or registered to vote.
Can I deduct federal income taxes paid from my Delaware state return?
No. Delaware does not allow a deduction for federal income taxes paid. You can deduct state and local taxes (SALT) on your federal return, but not the reverse. However, you can deduct certain other expenses like mortgage interest, charitable donations, and education costs if you itemize.
What happens if I file late or do not file at all?
The Division of Revenue charges penalties and interest on unpaid taxes. The penalty for filing late is typically 5% per month (up to 25% total), and interest accrues daily at a rate set by the state. If you cannot pay by April 15, file anyway to minimize penalties, or contact the Division about a payment plan.