Taxation and Regulatory Compliance

How Much Is Delaware State Income Tax?

Understand Delaware's state income tax system. Explore how tax liability is determined and what it means for your finances.

Delaware imposes an individual income tax on residents and non-residents earning income within its borders. This state-level tax operates independently of the federal income tax system.

Delaware Individual Income Tax Rates

Delaware utilizes a progressive individual income tax system, with rates ranging from 0% to 6.6%. Taxable income up to $2,000 is not taxed. Income between $2,001 and $5,000 is taxed at 2.2%.

The rate progresses to 3.9% for income between $5,001 and $10,000, and 4.8% for income from $10,001 to $20,000. Taxable income from $20,001 to $25,000 is subject to a 5.2% rate. For income between $25,001 and $60,000, the rate is 5.55%. The highest marginal tax rate is 6.6%, applying to taxable income exceeding $60,000. These rates apply consistently across all filing statuses, including single, married filing jointly, married filing separately, and head of household. The legal framework for these rates is outlined in Delaware Code Section 1102.

Who Pays Delaware Income Tax

Delaware categorizes taxpayers into three groups based on residency: full-year residents, part-year residents, and non-residents. A full-year resident is an individual domiciled in Delaware for any part of the tax year, or one who maintains a place of abode in Delaware and spends more than 183 days there. Full-year residents are taxed on all income earned from all sources.

A part-year resident is an individual who either moved into or out of Delaware during the tax year. These individuals are taxed on all income earned while they were a Delaware resident, as well as on income derived from Delaware sources during their non-resident period. Non-residents are individuals not domiciled in Delaware at any point during the tax year, and are taxed only on income derived from Delaware sources. Nonresidents must file a Delaware tax return if their gross income from Delaware sources exceeds $9,400. Residents and part-year residents must also file if their Delaware adjusted gross income (AGI) exceeds certain thresholds, such as $9,400 for single filers or $15,450 for married filing jointly, with higher thresholds for older or blind individuals.

Income Subject to Taxation

Various types of income are subject to Delaware individual income tax for residents, often mirroring federal taxable income categories. These include wages, salaries, and tips from employment. Income from a business, whether self-employment or an ownership stake, is also taxable. Rental income, including earnings from real estate properties, falls under taxable income.

Investment income, such as interest and dividends, is subject to Delaware income tax. Capital gains, profits from selling assets like stocks or real estate, are taxed at the same rates as personal income. Certain income types are excluded from Delaware taxation. Social Security benefits are fully excluded. Residents aged 60 or older can also exclude a portion of eligible pension or retirement income, up to $12,500.

Common Deductions and Credits

Delaware taxpayers can reduce their taxable income through deductions or lower their tax liability directly through credits. The state offers a standard deduction, which for the 2024 tax year is $3,250 for single filers, heads of household, and married individuals filing separately. For those married filing jointly, the standard deduction is $6,500. An additional $2,500 can be claimed by taxpayers aged 65 or older. Taxpayers who itemize deductions on their federal return may also itemize on their Delaware return if the deductions align.

Several credits are available to reduce a taxpayer’s final tax liability. A personal credit of $110 is available for each qualifying individual claimed on the return. An additional $110 personal credit can be claimed by individuals aged 60 or older. The credit for taxes paid to other states helps prevent double taxation for Delaware residents who earn income in another state. Delaware also offers an Earned Income Tax Credit (EITC) and a Child and Dependent Care Credit, with eligibility mirroring federal qualifications. The Earned Income Tax Credit can be refundable at 4.5% of the federal credit, or nonrefundable at 20%.

Filing Requirements and Payment

Delaware individual income tax returns are generally due by April 30th for calendar year filers. If the due date falls on a weekend or holiday, the deadline shifts to the next business day. Taxpayers who require additional time to file their return can obtain an automatic extension until October 15th. It is important to note that this extension applies only to the filing of the return, not to the payment of any taxes owed; payment is still due by the original April 30th deadline to avoid penalties and interest.

Individuals whose income is not subject to withholding, such as from self-employment or investments, may be required to make estimated tax payments if they expect to owe at least $400 in Delaware income tax. These estimated payments are due quarterly, on April 15, June 15, September 15, and January 15 of the following year. Tax liabilities can be paid through various methods, including online payments via the Delaware Taxpayer Portal using a debit/credit card or ACH direct debit from a bank account. Payments can also be made by mail with a check or money order.

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