Delaware Taxes

Delaware taxes determine how much individuals and businesses in the state of Delaware pay to the state government. Delaware's income tax covers six brackets, which range from 2.2 percent to 6.6 percent. No tax is collected on the first $2,000. The breakdown of taxable income is:

  • Between $2,001 and $5,000: 2.2 percent
  • Between $5,001 and $10,000: 3.9 percent
  • Between $10,001 and $20,000: 4.8 percent
  • Between $20,001 and $25,000: 5.2 percent
  • Between $25,001 and $60,000: 5.55 percent
  • Over $60,000: 6.6 percent

All residents in the state must file the Individual Resident Tax Return, or Form 200-01, on or before April 30. If April 30 is on a holiday or weekend, the due date is pushed to the following business day. Delaware's tax forms are available on the government revenue website. Taxpayers in the state can file personal income tax returns for the current tax year online. They can also file electronic late returns for tax years 2012 through 2014.

Those serving as active firefighters or on rescue squads may qualify for state tax credits. The credit is as much as $400 for equipment, clothing, motor fuel, and other needed items that allow them to perform their duties in these roles.

The state has a gross receipt tax on most commercial businesses. Gross receipts are the total receipts without any deductions for costs of labor, interest, delivery, state of federal taxes, goods or property sold, or other expenses. The business and occupational license tax rates range between 0.1037 percent and 2.0736 percent. The rate depends on the business activity category.

Any owner of personal property, except for registered motor vehicles, is required to file a declaration on or before November 1. October 1 is the assessment date across all municipalities in Delaware. Each geographical area has unique variables, so property owners should contact the county property tax or finance office for additional information.

  • New Castle County: (302) 323-2600
  • Kent County: (302) 744-2386
  • Sussex County: (302) 855-7871

Residents ages 65 years and older and disabled residents may qualify for property tax relief programs. The property tax credit application for seniors has a filing deadline of September 1. Submissions should include proof of birth date. File separate applications for any joint property owner.

The Delaware estate tax is required of all property owners who passed away on or after July 1, 2009. As the local government phased out the federal estate tax, individuals who died between January 1, 2005 and June 30, 2009 were not responsible for the Delaware estate tax.

There is no statewide sales tax. This state has the fourth-lowest property taxes in the U.S. The low tax rate makes Delaware a top state for retirement.

Why Is Delaware Considered a Tax Shelter?

A tax shelter refers to any method that reduces taxable income, resulting in lower tax payments. One loose definition is any method that allows a $1 return within four years on every $1 spent to reduce taxable income. Either a corporation or an individual can create a tax shelter. Certain states offer more favorable tax shelters, such as Delaware and Nevada. These tax shelters have increased the number of incorporated companies in these states.

The local government in Delaware offers additional tax benefits to corporations, resulting in higher numbers of business filings. Companies registered in Delaware are not subject to taxes on:

  • Sales
  • Capital shares
  • Stock transfers
  • Inheritance
  • Business transactions
  • Inventory
  • State corporate income

Businesses are not taxed on interest or other investment income. This is the case for companies operating outside of the state, as long as they are registered in Delaware. The state does not require corporate tax on investment income, including interest, earned by a Delaware holding company.

The state of Delaware has a $250 flat-fee LLC tax of and a $100 flat-fee franchise tax. These fees in other states are often based on earned income. Corporate business owners can maintain confidentiality by protecting their personal information and identities from the public record.

S-corporations can also be advantageous for tax purposes since they are not federally taxed. All income and losses are passed through to shareholders, similar to a pass-through entity. LLCs and S-corporations can actualize gains and write off losses, helping to reduce quarterly tax payments.

The Delaware State Bar Association performs routine reviews of the corporate laws within the state. Companies registered and incorporated in Delaware have a better legal system if a review of the tax laws is necessary as a result of these routine reviews.

For legal questions about Delaware taxes, post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.

Title: Delaware Taxes

What are Delaware Taxes?

Individuals and businesses in the state of Delaware are subject to tax. Delaware's income tax covers six brackets, which range from 2.2% to 6.6%. No tax is collected on the first $2,000. The breakdown of taxable income is:

  1. Between $2,001 and $5,000: 2.2%
  2. Between $5,001 and $10,000: 3.9%
  3. Between $10,001 and $20,000: 4.8%
  4. Between $20,001 and $25,000: 5.2%
  5. Between $25,001 and $60,000: 55%
  6. Over $60,000: 6%

All residents in the state must file the Individual Resident Tax Return, or Form 200-01, on or before April 30. If April 30 is on a holiday or weekend, the due date is pushed to the following business day. Delaware's tax forms are available on the government revenue website. Taxpayers in the state can file personal income tax returns for the current tax year online. They can also file electronic late returns for tax years 2012 through 2014.

Those serving as active firefighters or on rescue squads may qualify for state tax credits. The credit is as much as $400 for equipment, clothing, motor fuel, equipment, and other needed items that allow them to perform the duties in these roles.

The state has a gross receipt tax on most commercial businesses. Gross receipts are the total receipts without any deductions for costs of labor, interest, delivery, state of federal taxes, goods or property sold, or other expenses. The business and occupational license tax rates range between 0.1037 percent to 2.0736 percent. The rate depends on the business activity category.

Any owner of personal property, except for registered motor vehicles, is required to file a declaration on or before November 1. October 1 is the assessment date across all municipalities in Delaware. Each geographical area has unique variables, so property owners should contact the county property tax or finance office for additional information.

  1. New Castle County: (302) 323-2600
  2. Kent County: (302) 744-2386
  3. Sussex County: (302) 855-7871

Residents ages 65 years and older and disabled residents may qualify for property tax relief programs. The property tax credit application for seniors has a filing deadline of September 1. Submissions should include proof of birth date. File separate applications for any joint property owner.

The Delaware estate tax is required of all property owner who passed away on or after July 1, 2009. As the local government phased out the federal estate tax, individuals who died between January 1, 2005 and June 30, 2009 were not responsible for the Delaware estate tax.

There is no statewide sales tax. This state has the fourth-lowest property taxes in the U.S. The low tax rate makes Delaware a top state for retirement.

Why is Delaware Considered a Tax Shelter?

A tax shelter refers to any method that reduces taxable income, resulting in lower tax payments. One loose definition is any a method that every $1 spent to reduce taxable income returns at least $1 within four years. Either a corporation or an individual can create a tax shelter. Certain states offer more favorable tax shelters, such as Delaware and Nevada, which has increased the number of incorporated companies in these states.

The local government in Delaware offers additional tax benefits to its corporations, resulting in higher numbers of business filings. Companies registered in Delaware are not subject to taxes on:

  1. Sales
  2. Capital shares
  3. Stock transfers
  4. Inheritance
  5. Business transactions
  6. Unitary
  7. Inventory
  8. State corporate income

Businesses are not taxed on interest or other investment income. This is the case for companies operating outside of the state, as long as they are registered in Delaware. The state does not require corporate tax on investment income, including interest, earned by a Delaware holding company.

The state of Delaware has a $250 flat-fee LLC tax of and a $100 flat-fee franchise tax. These fees in other states are often based on earned income. Corporate business owners can maintain confidentiality by protecting their personal information and identities from the public record. S-corporations can also be advantageous for tax purposes since they are not federally taxed. All income and losses are passed through to shareholders, similar to a pass-through entity. LLCs and S-corporations can actualize gains and write off losses, helping to reduce quarterly tax payments.

The Delaware State Bar Association performs routine reviews of the corporate laws within the state. Companies registered and incorporated in Delaware have a better legal system if a review of the tax laws is necessary as a result of these routine reviews.

For legal questions about Delaware taxes, post your legal need on Upcounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.