Introduction
Delaware is known for its business-friendly tax policies, but both residents and businesses must comply with various state tax obligations. Unlike states such as Wyoming, Delaware does have a state income tax, along with franchise taxes, business taxes, and property taxes.
This guide breaks down the types of taxes in Delaware, including personal income tax, corporate tax, franchise tax, sales tax, and property tax, to help individuals and businesses understand their tax obligations.
Overview of Delaware Taxes
| Tax Type | Applies To | Tax Rate |
|---|---|---|
| Personal Income Tax | Delaware residents & income earners | 0% – 6.6% |
| Corporate Income Tax | Corporations operating in Delaware | 8.7% |
| Franchise Tax | LLCs & corporations registered in Delaware | $300+ for LLCs, varies for corporations |
| Gross Receipts Tax | Businesses selling goods/services in Delaware | 0.0945% – 0.7468% |
| Property Tax | Homeowners & real estate owners | 0.56% average |
| Sales Tax | Most goods & services | 0% (Delaware has no state sales tax) |
Delaware Personal Income Tax
- Delaware has a graduated income tax ranging from 0% to 6.6%.
- All Delaware residents and non-residents earning Delaware-source income must file a state tax return.
- Common income tax deductions include:
- Contributions to Delaware 529 college savings plans.
- Interest from Delaware municipal bonds.
Delaware Income Tax Brackets (2025)
| Taxable Income | Tax Rate |
|---|---|
| $0 – $2,000 | 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 Corporate Income Tax
- Delaware corporations conducting business in the state must pay an 8.7% corporate income tax.
- Companies registered in Delaware but not operating in the state do not pay corporate income tax but must pay franchise tax.
Delaware Franchise Tax
- LLCs, limited partnerships, and corporations must pay an annual franchise tax.
- LLCs & LPs pay a flat $300 per year.
- Corporations pay based on shares issued (minimum $175, maximum $200,000).
- Franchise taxes must be paid by March 1 each year to maintain good standing.
Delaware Gross Receipts Tax
- Businesses that sell goods and services in Delaware must pay a gross receipts tax.
- Tax rates range from 0.0945% to 0.7468%, depending on the industry.
- No deductions are allowed for business expenses when calculating tax liability.
Delaware Property Taxes
- Delaware has low property taxes, with an average rate of 0.56%, making it one of the lowest in the U.S.
- Property taxes vary by county and municipality.
- Homeowners can apply for tax exemptions, including:
- Senior School Property Tax Credit (for homeowners 65 and older).
- Veterans and disability exemptions.
Does Delaware Have Sales Tax?
- No, Delaware does not have a state sales tax.
- Businesses operating outside Delaware may still be required to collect sales tax in other states.
- Some services, including hotel accommodations and some telecommunications, are subject to special state fees.
IRS Compliance & Tax Filing Deadlines
- Delaware Personal Income Tax Deadline – April 30, 2025.
- Franchise Tax Deadline – March 1, 2025.
- Corporate Tax Filing Deadline – April 15, 2025 (for C-Corps).
- Quarterly Estimated Tax Payments – Due April 15, June 15, September 15, and January 15.
Conclusion
Delaware offers a business-friendly tax environment, but residents and businesses must comply with personal income tax, franchise tax, gross receipts tax, and corporate tax rules. Understanding these taxes helps businesses and individuals reduce tax liabilities and maintain compliance.
For expert tax planning and compliance in Delaware, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.
Frequently Asked Questions (FAQs)
1. Does Delaware have a state income tax?
Yes, Delaware has a graduated state income tax ranging from 0% to 6.6%.
2. Is Delaware tax-friendly for businesses?
Yes, Delaware has no sales tax, low property taxes, and no corporate tax for companies not operating in the state.
3. Who pays Delaware’s franchise tax?
All LLCs, limited partnerships, and corporations registered in Delaware must pay an annual franchise tax.
4. How does Delaware’s Gross Receipts Tax work?
Businesses that sell goods or services in Delaware must pay a gross receipts tax between 0.0945% and 0.7468%, with no deductions allowed.
5. Should I hire a CPA for Delaware tax planning?
Yes, a CPA ensures tax compliance, maximizes deductions, and prevents costly mistakes.
About Our CPA
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant and an IRS Enrolled Agent (EA). He specializes in Delaware business and personal tax planning, franchise tax compliance, and corporate tax strategies.
Schedule a consultation today with Anshul Goyal, CPA, for expert tax guidance.