Introduction
Delaware is often considered a tax-friendly state, especially for businesses, but does it have a state income tax for individuals? The answer is yes. Delaware imposes a graduated state income tax ranging from 0% to 6.6%, depending on taxable income.
This guide explains Delaware’s income tax rates, who must file, available deductions and credits, and how to file a Delaware state income tax return.
Does Delaware Have a State Income Tax?
Yes, Delaware has a personal state income tax that applies to:
- Residents who earn income in Delaware or outside the state.
- Non-residents who earn income from Delaware sources.
Unlike some states, Delaware does not have local income taxes, which means cities and counties do not impose additional taxes.
Delaware State Income Tax Rates (2025)
Delaware has a progressive income tax system, meaning tax rates increase as income rises.
| 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% |
Who Must File a Delaware Income Tax Return?
You must file a Delaware state income tax return if:
- You are a full-year resident and had taxable income over $2,000.
- You are a part-year resident who earned income in Delaware.
- You are a non-resident with income from Delaware sources, such as wages, rental income, or business income.
What Income Is Taxable in Delaware?
The following types of income are subject to Delaware state income tax:
- Wages, salaries, and tips
- Self-employment income
- Rental income from Delaware properties
- Capital gains from assets sold in Delaware
- Business income earned in Delaware
Income That Is Not Taxed in Delaware
- Social Security benefits
- Military pensions and federal retirement benefits
- Out-of-state municipal bond interest
Delaware Tax Deductions and Credits
Standard Deduction vs. Itemized Deductions
- Standard Deduction (2025):
- $3,250 for single filers
- $6,500 for married filers
- Taxpayers who itemize deductions on their federal return can also itemize deductions on their Delaware return.
Tax Credits Available in Delaware
- Earned Income Tax Credit (EITC) – Based on federal eligibility.
- Child Care Credit – Up to 50% of federal child care expenses.
- 529 College Savings Plan Deduction – Contributions to a Delaware 529 Plan are deductible.
- Senior School Property Tax Credit – Homeowners 65+ can receive up to $500 in property tax relief.
How to File a Delaware Income Tax Return
Required Forms
- Form 200-01 – For full-year residents.
- Form 200-02 – For non-residents and part-year residents.
- Schedule A – For itemized deductions.
Filing Options
- E-file through the Delaware Division of Revenue website (fastest option).
- Mail a paper return to the Delaware Division of Revenue.
Delaware Tax Filing Deadlines
- April 30, 2025 – Delaware personal income tax return due.
- October 15, 2025 – Extended deadline if an extension request is filed by April 30.
What Happens If You Don’t File or Pay Taxes on Time?
- Late Filing Penalty: 5% per month, up to 50% of the total tax due.
- Late Payment Penalty: 1% per month on unpaid taxes.
- Interest on Unpaid Taxes: 0.5% per month until paid in full.
If you cannot pay your tax bill in full, Delaware allows payment plans through the Division of Revenue.
IRS Compliance and Federal Tax Filing for Delaware Residents
Even though Delaware has its own income tax, residents must also file federal taxes with the IRS:
- Form 1040 – U.S. Individual Income Tax Return.
- Schedule A – For itemized deductions.
- Schedule C – For self-employment income.
Conclusion
Delaware does have a state income tax, with rates ranging from 0% to 6.6%, depending on income level. Residents, part-year residents, and non-residents earning income in Delaware must file a state tax return.
For expert tax filing assistance, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.
Frequently Asked Questions (FAQs)
1. Is Delaware a tax-free state?
No, Delaware has a state income tax, but no sales tax and low property taxes.
2. Who has to pay Delaware state income tax?
Full-year and part-year residents, as well as non-residents earning income in Delaware, must pay state income tax.
3. Does Delaware tax retirement income?
No, Social Security and military pensions are not taxed, but other retirement income (such as 401(k) withdrawals) may be taxed.
4. What is the Delaware tax deadline for 2025?
The Delaware personal income tax return is due on April 30, 2025.
5. Should I hire a CPA to file my Delaware taxes?
Yes, a CPA can help maximize deductions, ensure IRS compliance, and avoid penalties.
About Our CPA
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant and an IRS Enrolled Agent (EA). He specializes in Delaware income tax filing, tax deductions, and compliance strategies.
Schedule a consultation today with Anshul Goyal, CPA, for expert tax guidance.