Do I Have to File a Delaware State Tax Return?

State tax filing obligations vary significantly based on an individual’s connection to a state, including where they live, work, and earn income. This article clarifies the specific conditions under which an individual must file a Delaware state tax return. It examines Delaware’s definitions of residency, taxable income, and filing thresholds to help determine personal filing responsibilities.

Understanding Delaware Residency

Understanding Delaware income tax obligations begins with determining residency status. Delaware distinguishes between full-year residents, part-year residents, and non-residents for tax purposes, each with different implications for income subject to state taxation.

An individual is a full-year resident if domiciled in Delaware for the entire tax year. Domicile refers to one’s permanent home. Alternatively, a person is a full-year resident if they maintained a place of abode in Delaware and spent over 183 days in the state, regardless of domicile. A part-year resident is an individual who moved into or out of Delaware during the tax year, meaning they were domiciled in the state for only a portion of the year.

A non-resident was not domiciled in Delaware for any part of the tax year. If a person was not domiciled in Delaware and did not maintain a place of abode while spending over 183 days there, they are considered a non-resident for tax purposes. Specific rules apply to military members and students, which can affect their residency.

Delaware Taxable Income and Source Rules

Delaware taxes various income types for residents, while non-residents are taxed on income sourced within the state. Understanding taxable income and Delaware-source income is important for filing requirements.

For residents, income subject to Delaware tax includes wages, salaries, interest, dividends, business income, and capital gains. Rental income from properties, whether inside or outside Delaware, is also taxable. The state uses a progressive income tax system, with 2024 rates ranging from 0% to 6.6% based on income level.

For non-residents, only income from Delaware sources is subject to state tax. Delaware-source income includes compensation for personal services performed in the state, or services from Delaware employment. Income from owning or selling real or tangible personal property in Delaware also constitutes Delaware-source income. This extends to income from a business, trade, profession, or vocation carried on within the state. Winnings from pari-mutuel wagering in Delaware are also considered Delaware-source income.

Delaware Filing Requirements and Thresholds

Filing a Delaware state tax return depends on residency status and income amount. Specific gross income thresholds determine if a return is necessary, even if no tax is owed.

Full-year residents must file a Delaware income tax return if their individual Delaware adjusted gross income (AGI) exceeds certain 2024 thresholds based on age and filing status:
Single, under 60: $9,400
Single, 60-64: $12,200
Single, 65 or older or blind: $14,700
Married filing jointly, under 60: $15,450
Married filing jointly, 60-64: $17,950
Married filing jointly, 65 or older or blind: $20,450

Part-year residents are generally required to file a Delaware tax return if they had any income from any source while a Delaware resident, or income from a Delaware source while a non-resident. Part-year residents can file either a resident or non-resident return, choosing the most advantageous method. Non-residents must file a Delaware tax return if they have any gross income from sources within Delaware during the tax year.

Special Filing Situations

Certain individuals may have unique circumstances that affect their Delaware state tax filing requirements. These situations often involve specific rules regarding domicile, income sourcing, or exemptions.

Military Personnel

Active duty military personnel who are residents of Delaware are subject to Delaware income tax on their military pay. However, if a military member is a non-resident of Delaware and is stationed in the state, they are generally not required to file a Delaware return if their only source of income is active duty military pay. The Service Members Civil Relief Act (SCRA) allows military members to maintain their legal residence in one state while being stationed in another, which can exempt their military income from taxation by the state where they are stationed. If non-resident military personnel have other income earned from Delaware sources, that non-military income is subject to Delaware income tax.

Military Spouses

For military spouses, the Military Spouses Residency Relief Act (MSRRA) allows them to retain their domicile for tax purposes, provided it is the same as their service member spouse. This means a military spouse residing in Delaware with their service member on orders may not be required to pay Delaware state tax on income if they meet eligibility requirements and their legal residence is elsewhere.

Dependents

Students and other individuals who are claimed as dependents on another person’s federal income tax return may still need to file a Delaware return if their Delaware adjusted gross income exceeds specific thresholds. For the 2024 tax year, a dependent under 60 must file if their Delaware AGI is more than $5,250. Higher thresholds apply for dependents who are older or blind.

Social Security and Pension Income

Individuals whose income consists solely of Social Security benefits typically do not have a Delaware filing requirement, as Social Security benefits are fully excluded from Delaware taxable income. For pension income, Delaware residents aged 60 or older can exclude up to $12,500 of eligible pension or retirement income. Individuals under 60 receiving a pension can exclude up to $2,000. If total income, after these exclusions, falls below the general filing thresholds, a return may not be necessary.