Navigating the complexities of state taxes can be daunting, but understanding Delaware's tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of The First State's tax system, from income and sales taxes to property taxes and retirement benefits.
Delaware state tax: Overview
Shopping in Delaware comes with a benefit. There is no sales tax at all, making it one of the few states where you can enjoy shopping tax-free.
Property taxes in Delaware are also fairly low, which is a plus for homeowners. And if your income is under $2,000, you won't pay state income tax.
For those earning more, Delaware’s top income tax rate is 6.6 percent, which applies to income over $60,000. While it is not the lowest in the country, many residents still find the overall tax burden manageable.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Delaware income tax
Delaware has a graduate state individual income tax rate ranging from 2.2% to 6.6%, according to the Tax Foundation.
Delaware retirement taxes
Delaware tax on retirement benefits: Delaware does not tax Social Security benefits or Railroad Retirement benefits.
Retirees age 60 and older may exclude up to $12,500 of pension or retirement income from a qualified retirement plan in Delaware. This income includes but is not limited to:
- Interest income
- Capital gains income
- Net rental income
- Income from dividends
(Note: The pension exclusion is limited to $2,000 for taxpayers under 60.)
- Social Security: Not taxable
- Pensions: Partially taxable
- 401(k) and IRA Distributions: Partially taxable
Delaware sales tax
Delaware does not impose state or local sales tax.
How much are property taxes in Delaware?
In Delaware, the average effective property tax rate is 0.5%, which is lower than in most other U.S. states.
Source: Tax Foundation
Delaware Property Tax Breaks for Retirees
Senior Property Tax Credit: Some homeowners can get a property tax credit of up to $500 against school property taxes. Delaware requires homeowners meet certain eligibility criteria to qualify for the credit.
- Homeowners must have paid their entire property tax bill for the prior year.
- The property must be the homeowner's primary residence.
- Homeowners must be 65 or older.
Note: If one spouse is not yet 65, the other spouse may apply for the school property tax credit when the home is jointly owned.
Delaware gas tax
Gasoline |
$0.23 per gallon |
Diesel |
$0.22 per gallon |
Source: Sales Tax Handbook
Delaware alcohol and tobacco taxes
Product |
Tax Amount |
|---|---|
Cigarettes |
$1.60 per pack |
Other Tobacco Products |
15% of wholesale price |
Medical Marijuana |
0% |
Source: Sales Tax Handbook
Product |
Tax Amount |
|---|---|
Wine |
$0.97 per gallon |
Beer |
$0.16 per gallon |
Liquor |
$3.75 per gallon |
Source: Sales Tax Handbook
Delaware estate and inheritance tax
Delaware is one of the states with no estate or inheritance taxes.
