About Delaware State Income Tax

Delaware uses a progressive tax system with seven tax brackets. While Delaware has income tax, it compensates with NO sales tax, making it attractive for shopping and overall affordability.

Delaware Tax Brackets 2026

• $0 - $2,000: 0% (Tax-free)
• $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 Tax Benefits

• No Sales Tax: Delaware has no state or local sales tax!
• Tax-Free Shopping: Popular shopping destination for neighboring states
• Moderate Income Tax: 6.6% top rate is competitive
• No Inheritance Tax: For deaths after 2017

Frequently Asked Questions

What is Delaware's income tax rate?

Delaware has progressive tax rates from 0% to 6.6%. The first $2,000 is tax-free, and the top rate of 6.6% applies to income over $60,000.

Does Delaware have sales tax?

No! Delaware is one of only 5 states with no sales tax. This makes Delaware a popular shopping destination, especially for big-ticket items like electronics and furniture.

Does Delaware tax retirement income?

Delaware offers pension exclusions for those 60 and older. Up to $12,500 of pension income (or up to $2,000 of other income) can be excluded. Social Security is not taxed.

Why is Delaware tax-friendly for businesses?

Over 60% of Fortune 500 companies are incorporated in Delaware due to business-friendly laws, specialized Court of Chancery, and favorable corporate tax structure.

Delaware vs. Neighboring States

• Pennsylvania: 3.07% income tax + 6% sales tax
• New Jersey: Up to 10.75% income tax + 6.625% sales tax
• Maryland: Up to 5.75% income tax + 6% sales tax
• Delaware: Up to 6.6% income tax + 0% sales tax ✓

Tips for Delaware Taxpayers

• Take advantage of Delaware's no sales tax for large purchases
• Seniors should claim pension exclusions if eligible
• First $2,000 of income is tax-free
• Delaware doesn't tax Social Security benefits
• Consider overall tax burden vs. neighboring states