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Income Tax in Delaware: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Delaware stands out as one of just five states with no sales tax, which means the state relies more heavily on its personal income tax for revenue. The state imposes a graduated income tax with seven brackets and a top marginal rate of approximately ~6.60% on income above ~$60,000. While the top rate is moderate by national standards, the combination of no sales tax and relatively low property taxes makes Delaware appealing for many residents. Wilmington residents face an additional city wage tax that increases the overall burden.

Delaware Income Tax Rates (2026)

Taxable Income Bracket	Marginal Rate
$0 to ~$2,000	~0%
~$2,001 to ~$5,000	~2.20%
~$5,001 to ~$10,000	~3.90%
~$10,001 to ~$20,000	~4.80%
~$20,001 to ~$25,000	~5.20%
~$25,001 to ~$60,000	~5.55%
Over ~$60,000	~6.60%

Wilmington City Wage Tax

Tax	Rate
Wilmington resident wage tax	~1.25%
Wilmington nonresident wage tax	~1.25%

Wilmington is the only Delaware municipality that imposes a local income/wage tax. This applies to wages earned within the city or by city residents regardless of where they work.

How Delaware Income Tax Works

Graduated Rate Structure

Delaware’s seven-bracket system applies progressively, meaning only the income within each bracket is taxed at that bracket’s rate. The effective tax rate for most filers is substantially lower than the top marginal rate of ~6.60%.

Standard Deduction and Exemptions

Standard deduction: ~$3,250 for single filers; ~$6,500 for married filing jointly
Personal credit: ~$110 per exemption claimed
Additional credit for age 60+: ~$110 per qualifying person
Itemized deductions: Delaware allows itemized deductions that closely track the federal Schedule A, including charitable contributions, mortgage interest, and medical expenses exceeding the threshold

Key Deductions and Exclusions

Social Security: Fully exempt from Delaware income tax
Retirement income exclusion: Filers age 60 and older may exclude up to ~$12,500 of pension and eligible retirement income; under age 60, the exclusion is approximately ~$2,000
Military pension: Excluded under the retirement income exclusion provisions
529 plan contributions: Delaware residents may deduct contributions to the state 529 plan, with no annual dollar limit on the deduction (subject to gift tax rules)
Charitable mileage and volunteer deductions: Available as itemized deductions

Tax Credits

Child and dependent care credit: A percentage of the federal credit
Earned income credit: Approximately ~4.5% of the federal EITC (among the lowest state EITC rates)
Voluntary cleanup credit: For environmental remediation on brownfield sites
Historic preservation credit: For qualifying rehabilitation of historic structures
Land and Historic Resource Conservation credit: For donated conservation easements

Who Must File in Delaware

Filing is required if:

You are a Delaware resident with any gross income (Delaware has no minimum income filing threshold for residents who owe tax)
You are a part-year resident with Delaware-source income
You are a nonresident who earned income in Delaware
You owe Wilmington city wage tax

Delaware uses Form 200-01 for residents and Form 200-02 for nonresidents and part-year residents. The filing deadline is April 30, which is two weeks later than most states.

Comparison to National Average

State	Top Income Tax Rate	Sales Tax	Structure
Delaware	~6.60%	0%	Graduated
Maryland	~5.75%	~6.0%	Graduated
Pennsylvania	~3.07%	~6.0%	Flat
New Jersey	~10.75%	~6.625%	Graduated
National average	~4.60%	~5.0%	Varies

Delaware’s income tax rate is above the national average, but the absence of a sales tax offsets a significant portion of the burden for consumers. The overall tax environment is moderate compared to its Mid-Atlantic neighbors.

Tips for Minimizing Delaware Income Tax

Maximize the retirement income exclusion. Filers 60 and older can exclude up to ~$12,500 of pension and retirement income, effectively eliminating state tax on modest retirement distributions.
Contribute to a Delaware 529 plan. Contributions are fully deductible with no annual cap, making this one of the most generous 529 deductions in the country.
Itemize when beneficial. Delaware allows full itemized deductions closely mirroring the federal Schedule A. If your mortgage interest, state taxes, and charitable contributions exceed the standard deduction, itemizing saves money.
Avoid Wilmington wage tax surprises. If you work or live in Wilmington, budget for the additional ~1.25% wage tax that is not reflected in state rates.
Claim the earned income credit. Even though Delaware’s EITC is modest at ~4.5% of the federal credit, it still provides meaningful relief for low- to moderate-income filers.
Time income recognition carefully. Because the top bracket begins at just ~$60,000, strategies like Roth conversions or capital gain harvesting should consider the state impact.
File by April 30. Delaware’s extended deadline gives you two extra weeks compared to most states, but do not confuse this with the federal deadline.

Key Takeaways

Delaware imposes a graduated income tax with a top rate of ~6.60% on income above ~$60,000
The state has no sales tax, making income and property taxes the primary revenue sources
Retirement income exclusions of up to ~$12,500 for filers 60+ and full Social Security exemption benefit retirees
529 plan contributions are fully deductible with no dollar limit
Wilmington residents and workers face an additional ~1.25% wage tax
The filing deadline is April 30, later than most states

Next Steps

Federal Income Tax Guide 2026 — See how federal changes affect your Delaware return.
State Income Tax Rates Comparison 2026 — Compare Delaware to all 50 states.
Standard vs. Itemized Calculator — Decide whether to itemize on your Delaware return.
Capital Gains Tax Guide — Understand how investment income is taxed in Delaware.
Find a CPA Near You — Get professional help with Delaware-specific filing.