Everything You Need To Know About Delaware State Taxes

FT Contributor
A road sign that reads "Delaware."
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The Delaware Division of Revenue (DOR) implements and administers the tax system in the state. If you’re a resident in Delaware, you’re responsible for paying income taxes to the state on the income you earn throughout the year.  

When compared to other states that charge income tax, Delaware ranks 14th in the amount of income taxes residents pay. However, the state’s tax system is unique because there’s no sales tax. Review this guide to learn more about the tax regulations imposed on Delaware residents.

Delaware Income Tax

When you file your tax return with the state, you must claim all income you earned in Delaware. However, depending on your situation, you may qualify for one or more of the following tax credits:

  • Neighborhood Assistance Act (NAA): If you invest in programs that support impoverished neighborhoods and low- or moderate-income families, you may qualify for the NAA credit. You can earn tax credits that are 50% of the contribution you made, up to $50,000, for as long as the initiative is available.
  • Volunteer Firefighter’s Credit: If you’re an active firefighter, or member of a rescue squad, auxiliary, or fire company, you qualify for a credit of up to $400 towards your state income tax liability for the purchase of clothing, equipment, and other necessities.
  • Historic Preservation Tax Credit: If you’re a resident curator or you work to revitalize and restore the community and are certified by the Delaware State Historic Preservation Office, you can claim this credit, which varies based on your contributions.

Social Security and Railroad Retirement benefits are excluded from your taxable income, as are certain pensions you’re awarded.

Delaware Income Tax Rate

If you earned income, you’re responsible for filing a federal income tax return. In Delaware, the amount of taxes you owe depends on how much you earned throughout the year. The state has seven tax brackets, which include the following:

Amount of Taxable Income Earned Tax Rate
Less than $2,000 0%
$2,001 to $5,000 2.2%
$5,001 to $10,000 3.9%
$10,001 to $20,000 4.8%
$20,001 to $25,000 5.2%
$25,001 to $60,000 5.55%
Over $60,000 6.6%

Delaware Sales Tax

Consumers in Delaware are not responsible for paying sales tax. However, the state imposes a tax on the gross receipts of most businesses that sell goods or services. “Gross receipts” refer to any revenue brought in by the company for the sale of these items or services, with no deductions or credits available.

Depending on the type of business, the tax rates for these gross receipts can range from 0.0945% to 1.9914%. Types of businesses include:

  • Sole proprietorship;
  • Partnership;
  • Corporation;
  • Limited liability corporation (LLC).

Depending on the type of business you have, you may be responsible for income taxes. A sole proprietor reports business income on an individual tax return while a partnership reports this income on a partnership return. Corporations are responsible for reporting income on corporation returns and filing these returns with the state. The type of business also determines when these taxes are due.

Businesses are responsible for paying occupational license taxes. The category of business the company performs determines the fees and taxes that must be paid. For example, an advertising agency is responsible for paying a $75 annual fee and a 0.003983% tax rate.

Delaware Property Tax

Personal property is not subject to a state tax in Delaware. While the state government doesn’t impose property taxes on real estate, it’s subject to county taxes, which include taxes for the school district, municipality, and vocational school district.

The local property taxes you’re required to pay vary depending on the location of your property. You must contact the city or county in Delaware where your property is located to find out more about real estate taxes you may owe.

If you qualify for the Senior School Property Tax Relief program, you’re eligible for a 50% tax credit up to $400 on regular school property taxes. To qualify, you must be 65 or older and your property must be your primary residence. If you moved to your home on or after January 1, 2018, you must prove you’ve lived in Delaware for at least the past 10 consecutive years. You’re also required to provide a state identification card or driver’s license and pay your property taxes in full by the end of the year. The deadline to apply for this credit is April 30.

Delaware Estate, Inheritance, and Gift Tax

Delaware doesn’t impose inheritance or gift taxes. However, if a decedent owes taxes to the state, these taxes must be paid before the estate can be transferred. Executors are required to file tax returns for these descendants and send them to:

Decedent Administrator
Delaware Division of Revenue
820 North French Street 8th Floor
Wilmington, DE 19801.

Since the federal estate tax was phased out, descendants who died on or after January 1, 2018, are exempt from filing an estate tax return.

Filing Taxes In Delaware

Your Delaware state income tax return is due on April 30 each year. You can use the DOR online system to file your taxes and pay or request your refund. You can also check the status of your return by logging into your online account. Alternatively, you can print the Resident Individual Income Tax Return form and submit it by mail to the DOR.

If you have a tax payment enclosed, mail the form to:

Delaware Division of Revenue
P.O. Box 508
Wilmington, DE 19899-0508.

If you’re requesting a tax refund, mail the form to:

Delaware Division of Revenue
P.O. Box 8710
Wilmington, DE 19899-8710.

If you’re just mailing in your tax return with no other action required, send it to:

Delaware Division of Revenue
P.O. Box 8711
Wilmington, DE 19899-8711.

While you can’t extend the time you have to pay your taxes, you can extend the deadline to prepare your tax return. File Form 1027 and the taxes you owe to extend your filing date by six months. If you owe taxes to the state, you can find your name on the delinquent taxpayers’ list.

It’s important to understand how the Delaware tax system works if you’re a resident in the state. By understanding how these tax laws apply to you, it’s easier to calculate what you owe and when it’s due.

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