Delaware Tax: Everything You Need to Know
Residents of Delaware file an Individual Resident Tax Return, also known as Form 200-01. 4 min read updated on February 01, 2023
Updated October 28, 2020:
What Are the Types of Delaware Tax?
Delaware tax includes the following:
- Personal income tax
- A tax on gross receipts
- Property taxes
- Estate taxes
- Capital gains tax
- Property tax
- Cigarette tax
- Alcohol tax
- Gas tax
Personal Income Taxes
Residents of the state of Delaware pay taxes on their income. Residents of Delaware file an Individual Resident Tax Return, also known as Form 200-01. This document must be filed annually.
Income tax in the state of Delaware consists of six brackets. The tax rates in those brackets range from a low of 2.2 percent to a high of 6.6 percent. A majority of taxpayers in the state of Delaware file their taxes electronically. This includes not only the current year’s taxes but also the late tax returns for previous years may also be filed electronically.
The state of Delaware does not charge consumers sales tax on purchases. Instead, it charges most businesses a tax on gross receipts. “Gross receipts” are defined as the total receipts of a business. There are no deductions for any expenses. Gross receipts include but are not limited to costs of labor, state and federal taxes, the costs of the goods sold, the costs of any property sold, delivery costs, and any interest expense incurred.
Real Property Taxes
The state of Delaware does not impose a tax on personal and real property. However, real property may be subject to school district property taxes, county property taxes, any municipal property taxes, and vocational school district taxes.
For Delaware residents age 65 and older, the state offers a variety of property tax relief programs. Residents with disabilities may also qualify for similar programs. Applications for the senior tax credit must be filed September 1, or earlier. Applications must include a copy of either a driver’s license or birth certificate as proof of age. Any qualified joint property owner must file a separate application of their own.
Estate tax is a tax imposed on the estate of a decedent. The estate tax in Delaware applies to estates with a value over 5.43 million as of 2015. All estates with a value of less are not subject to estate tax. The result is that the vast majority of estates in Delaware are not subject to the estate tax. The tax begins at 0.8 percent and increases to the top rate of 16 percent. In Delaware, an estate with a value of over $15.47 million will pay the top marginal rate.
Capital Gains Tax
Any gain from the sale of real estate in Delaware by an individual that lives in a different state is taxed at 6.75 percent. This applies to any gain minus any expenses of selling the real estate.
Property Tax in Delaware
Delaware property taxes are among the lowest in the entire United States. Delaware's average rate of property tax is 0.51 percent. This makes it the fourth-lowest of any state in the U.S. The typical Delaware homeowner pays just $1212 every year in these taxes.
Delaware Tax on Cigarettes
The state of Delaware increased the tax on cigarettes by $0.45 in 2009. Other products made with tobacco also had their rate increased. Cigars and tobacco, for example, increased the tax rate by 50 percent of the purchase price.
Delaware Tax on Alcohol
Although sales tax isn’t collected statewide on the sale of alcohol in Delaware, there are still a few excise taxes that may apply. The taxes are typically lower than across the country. For example, the beer tax is 16 cents per gallon. This is about 1.5 cents a beer. This means Delaware’s tax on beer is the 15th lowest in the country. In Delaware, the liquor tax is $3.75 a gallon. This tax is the 17th lowest in the country.
Delaware Tax on Gas
All those who drive in the state pay the Delaware tax on gasoline. It is an excise tax. On regular gasoline, it is $0.23 per gallon. This makes it the 19th lowest in the U.S. Diesel fuel is taxed at a different rate. That rate is $0.22 per gallon, making it the 11th lowest in the country.
Other Delaware Tax Facts
The status of refunds can be tracked online by taxpayers. Delaware keeps an online list of taxpayers that are delinquent on their taxes. No intangible personal property taxes are imposed by the state of Delaware.
Overview of Delaware Taxes
The taxes in Delaware are some of the lowest in the country. Property taxes in Delaware are the fourth lowest in the nation. Also, Delaware has no state sales tax. The state has a progressive income tax. The income tax rate ranges between 0 percent and 6.6 percent. The city of Wilmington has its own income tax. The rate for the city is 1.25 percent. Residents of Delaware who do not work or live in Wilmington do not pay the city’s income tax.
Delaware’s treatment of retirement income is the primary difference between Delaware income and federal adjusted gross income. Social Security income is not taxable. Income from a pension, up to $2000, is also not subject to state income tax in Delaware.
Delaware Tax Credits
In addition to tax credits previously discussed, Delaware offers other tax credits. Income from U.S. investments, like U.S. Bonds, is not taxable at the state level in Delaware. Delaware also offers personal credit. The personal credit is $110 for every exemption claimed on a federal income tax return. For example, if you claim yourself, your spouse, and three dependents, your total personal credit would be $550 (5 x $110). Additional personal credits of $110 may be claimed if you or your spouse are 60 or over.
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