Retiring in Delaware: how your income is taxed
Delaware is fairly tax-friendly for retirees. On a typical retirement income it ranks #32 of 51 for the lowest state income tax.
The rules in Delaware
- Social Security: Social Security and Railroad Retirement benefits are fully exempt from Delaware income tax.
- Pensions: At 60 and older, each person can exclude up to $12,500 a year of pensions and other eligible retirement income combined (401(k), IRA, government deferred compensation, dividends, interest, capital gains and net rent). Under 60, only $2,000 of employer pension income can be excluded. Government pensions are treated the same as private ones. Military retirement: for 2022 to 2026, up to $12,500 can be excluded at any age (at 60 and older this is the same $12,500, not an extra amount); the limit rises to $15,000 in 2027, $20,000 in 2028 and $25,000 from 2029.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals count as eligible retirement income under the same $12,500-per-person exclusion at 60 and older. There is no exclusion for them under 60.
- At 65 and older: Each filer 65 or older adds $2,500 to the standard deduction, and each filer 60 or older gets an extra $110 personal credit.
Calculate your Delaware retirement taxes
State income tax in Delaware: $612 a year
In Delaware, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In Delaware you'd pay about $612 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $65,052 (7.1% total).
Delaware ranks #32 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Delaware
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $612 | $0 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $4,159 | $2,735 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply Delaware's main exclusions and may differ for income-tested credits.
States with lower retirement taxes
Moving to Delaware in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Delaware come from (IRS migration data, 2022–2023).
- Pennsylvania to Delaware
- Maryland to Delaware
- New Jersey to Delaware
- New York to Delaware
- Florida to Delaware
- Virginia to Delaware
Frequently asked questions
Does Delaware tax Social Security?
Not taxed. Social Security and Railroad Retirement benefits are fully exempt from Delaware income tax.
Does Delaware tax pensions?
Partly taxed. At 60 and older, each person can exclude up to $12,500 a year of pensions and other eligible retirement income combined (401(k), IRA, government deferred compensation, dividends, interest, capital gains and net rent). Under 60, only $2,000 of employer pension income can be excluded. Government pensions are treated the same as private ones. Military retirement: for 2022 to 2026, up to $12,500 can be excluded at any age (at 60 and older this is the same $12,500, not an extra amount); the limit rises to $15,000 in 2027, $20,000 in 2028 and $25,000 from 2029.
Does Delaware tax 401(k) and IRA withdrawals?
Partly taxed. 401(k) and IRA withdrawals count as eligible retirement income under the same $12,500-per-person exclusion at 60 and older. There is no exclusion for them under 60.
Is Delaware a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, Delaware charges about $612 in state income tax, ranking #32 of 51 (lowest tax first).
Related
Sources: delcode.delaware.gov, legis.delaware.gov, aarp.org. Rules reviewed .