Delaware Tax Calculator
Delaware Income Tax
Delaware uses a graduated income tax with seven brackets, ranging from 0% on the first $2,000 of taxable income to a top rate of 6.6% on income exceeding $60,000. The 6.6% top rate is relatively high compared to other states, but it kicks in at a comparatively low income threshold. This means that most working Delaweareans with moderate income will pay the top rate on the bulk of their earnings.
Delaware provides a standard deduction of $3,250 for single filers and $6,500 for married filing jointly, which is well below the federal standard deduction. The state also offers a personal credit of $110 per person ($220 for married couples). Delaware allows itemized deductions, and taxpayers can deduct charitable contributions, medical expenses, and mortgage interest separately from their federal return.
Despite the relatively high top rate, Delaware's overall tax burden is moderated by the complete absence of sales tax and below-average property taxes. For a single filer earning $75,000, the Delaware income tax would be approximately $3,650, which is meaningful but offset by the savings from no sales tax on all purchases throughout the year.
| Taxable Income | Rate |
|---|---|
| $0 – $2,000 | 0.0% |
| $2,001 – $5,000 | 2.2% |
| $5,001 – $10,000 | 3.9% |
| $10,001 – $20,000 | 4.8% |
| $20,001 – $25,000 | 5.2% |
| $25,001 – $60,000 | 5.55% |
| Over $60,000 | 6.6% |
Delaware Sales Tax: None
Delaware is one of only five states with no sales tax at any level (state or local). This zero-sales-tax policy makes Delaware a popular shopping destination, particularly for residents of neighboring states. The Christiana Mall and Tanger Outlets in Rehoboth Beach draw shoppers from Pennsylvania, New Jersey, and Maryland who come specifically to make major purchases tax-free.
The absence of sales tax applies to everything: vehicles, electronics, clothing, furniture, building materials, and all other consumer goods. For a family spending $30,000 per year on taxable goods, living in Delaware saves roughly $2,000-$2,500 compared to living in a state with a 7-8% sales tax. This is a substantial and tangible benefit that partially offsets the higher income tax rates.
Delaware Property Tax
Delaware's effective property tax rate of approximately 0.53% is well below the national average. Property tax assessments in Delaware are notoriously outdated. New Castle County has been using assessments based on 1983 values, Kent County uses 1987 values, and Sussex County uses 1974 values. Courts have ordered reassessments in some jurisdictions, but the process has been slow and politically contentious.
Despite the outdated assessments, the low effective rates represent a real financial benefit for homeowners. Delaware offers a Senior School Property Tax Credit that provides $500 against school property taxes for homeowners aged 65 and older. The state also provides a property tax credit on the income tax return and various local exemptions. The combination of low property taxes and no sales tax makes Delaware's tax environment more complex than it first appears.
Delaware's Corporate Haven Status
Delaware is the legal domicile of over 1.8 million businesses, including more than 60% of Fortune 500 companies. Companies incorporate in Delaware for its specialized Court of Chancery (which uses judges rather than juries for business disputes), its well-developed body of corporate law, flexible incorporation statutes, and the fact that Delaware does not tax income earned outside the state by corporations incorporated there.
While this does not directly affect individual taxpayers, it generates significant revenue for the state through franchise taxes and filing fees, which constitute a large portion of Delaware's total revenue. This revenue stream allows Delaware to maintain relatively lower taxes on individuals than it might otherwise need. However, Delaware does impose a gross receipts tax on businesses operating within the state, which functions somewhat like a very low-rate sales tax on business revenue (rates vary from 0.0945% to 1.9914% depending on the industry).
Delaware Retirement Benefits
Delaware offers a $12,500 pension/retirement income exclusion per person for those aged 60 and older. For a married couple, this means up to $25,000 of retirement income can be excluded. Social Security benefits are fully exempt. Railroad Retirement benefits are also exempt. Combined with no sales tax and low property taxes, Delaware is a reasonably attractive retirement destination, though states like Florida and Nevada remain more favorable for high-income retirees due to their complete lack of income tax.
Delaware vs. Neighboring States
- Pennsylvania — Pennsylvania has a flat 3.07% income tax, much lower than Delaware's top 6.6%. However, Pennsylvania has 6.34% average sales tax and 1.36% property tax. Delaware's no-sales-tax and lower property tax can offset the income tax difference for many households.
- Maryland — Maryland has graduated rates up to 5.75% plus local income taxes averaging 3%, creating an effective top rate near 8.75%. Sales tax is 6%. Property tax is 1.01%. Delaware's income tax is lower, and the lack of sales tax and lower property tax make it more favorable overall.
- New Jersey — New Jersey has graduated income tax up to 10.75%, much higher than Delaware. Sales tax is 6.625%. Property tax is the nation's highest at about 2.23%. Delaware is substantially more tax-friendly across all categories.