Delaware has no sales tax on most purchases
Delaware does not charge a sales tax on retail goods or services. This applies to clothing, groceries, electronics, furniture, and most other items you buy in stores or online from Delaware retailers. If you live in Delaware or buy something from a Delaware business, you will not see a sales tax added to your receipt.
The state does charge taxes on specific categories — mostly things tied to vehicles, alcohol, and gambling — but these are not sales taxes. They are excise taxes or licensing fees applied to particular products or activities. For everyday shopping, Delaware's lack of a sales tax is complete.
Key Takeaways
- Delaware charges no sales tax on clothing, groceries, household goods, or most services purchased in the state.
- The state does tax gasoline, diesel, cigarettes, alcohol, and vehicle-related purchases through excise taxes and licensing fees.
- If you buy something online from a Delaware retailer, no sales tax is added, even if you live in another state that has sales tax.
- Other states may still tax your purchase if you live outside Delaware, depending on where you are located and that state's rules.
What Delaware does tax instead of sales tax
Delaware funds state operations through income tax, corporate tax, and specific excise taxes rather than a broad sales tax. The excise taxes apply to fuel, tobacco products, and alcohol. Gasoline and diesel are taxed per gallon. Cigarettes and smokeless tobacco carry a per-unit tax. Beer, wine, and spirits are taxed based on volume and type.
Vehicle-related costs also carry state taxes. When you register a vehicle in Delaware, you pay a registration fee based on the vehicle's value. When you buy a vehicle, you may owe a use tax if you bring it into the state from elsewhere. Boat registration and licensing also involve fees.
Gambling and lottery winnings are subject to state tax. Hotel occupancy tax applies to overnight stays in most Delaware hotels and motels, typically around 8 to 9 percent depending on the county.
How Delaware's lack of sales tax affects online shopping
When you order something online from a Delaware-based retailer, no sales tax is added to your order, regardless of where you live. This is one reason Delaware has historically been a hub for mail-order and online retail businesses. The company ships to you tax-free from their end.
However, your own state may require you to pay sales tax on that purchase. Most states now require online retailers to collect and send sales tax on orders shipped to that state, even if the retailer is based in Delaware. The responsibility to collect usually falls on the retailer if they have a physical presence or significant sales in your state. If they do not, your state may expect you to report and pay the tax yourself on your state tax return — though few individuals do.
The key point: Delaware itself adds nothing. What you owe depends on your state's rules, not Delaware's.
Why Delaware has no sales tax
Delaware's tax structure developed around corporate registration and income tax rather than consumer sales. The state has long attracted corporations to incorporate there because of business-friendly laws and low corporate taxes. This created a reliable revenue stream that reduced the need for a sales tax.
The lack of sales tax also became a competitive advantage for retail and mail-order businesses. Retailers could advertise lower prices than competitors in states with sales tax. This advantage persists today in online retail, where Delaware-based companies can offer tax-free shipping to customers nationwide.
What happens if you move to or from Delaware
If you move to Delaware from a state with sales tax, you will notice the difference immediately at checkout. Prices on receipts will match the sticker price. If you move from Delaware to another state, you will see sales tax added for the first time or at a higher rate than you may be used to.
If you buy something in another state and bring it to Delaware, you do not owe Delaware sales tax on it. Delaware has no use tax on personal goods brought into the state. However, if you buy a vehicle out of state and register it in Delaware, you may owe Delaware's vehicle use tax at registration time.
Frequently Asked Questions
Do I pay sales tax if I buy something in Delaware but live in another state?
Delaware does not charge you sales tax. However, your home state may require the retailer to collect sales tax or may expect you to report and pay it yourself. Check your state's rules on out-of-state purchases.
Is there any tax on groceries in Delaware?
No. Delaware does not tax groceries, prepared foods, or restaurant meals under a sales tax. Some prepared foods may be subject to other regulations, but there is no sales tax on food purchases.
Do I have to pay tax when I register my car in Delaware?
You pay a registration fee based on your vehicle's value, not a sales tax. If you bought the vehicle out of state, you may also owe Delaware's use tax at registration time. The amount depends on the purchase price and the vehicle's age.
Can I avoid sales tax by ordering from Delaware online?
Delaware adds no sales tax, but your state may require the retailer to collect it anyway. Most large online retailers now collect sales tax for all states where they have a significant presence. Check the retailer's tax policy before checkout.
What if I buy alcohol or cigarettes in Delaware?
These items are not subject to sales tax, but they are subject to Delaware excise taxes. The excise tax is usually included in the price you see, not added at checkout like a sales tax would be.