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    Delaware Tax Guide 2026

    TaxKiln Editorial · Last reviewed:

    Delaware imposes a 6-bracket personal income tax topping at 6.6% on income over $60,000 (30 Del. C. §1102). There is no state sales tax — instead, Delaware levies a gross receipts tax on sellers (0.0945%–1.9914% depending on business class, 30 Del. C. §2901). Wilmington adds a 1.25% city wage tax on residents and non-residents working in the city. The famous LLC franchise tax is $300/year (8 Del. C. §1108). Property tax averages ~0.58% — among the lowest.

    Personal income tax

    30 Del. C. §1102 imposes 6 brackets: • 0% on first $2,000 • 2.2% from $2,000 to $5,000 • 3.9% from $5,000 to $10,000 • 4.8% from $10,000 to $20,000 • 5.2% from $20,000 to $25,000 • 5.55% from $25,000 to $60,000 • 6.6% above $60,000 Filing threshold the same for single and MFJ — no marriage bonus. Standard deduction $3,250 single / $6,500 MFJ; additional $2,500 SD for 65+ filers. Delaware DOES NOT tax Social Security benefits. Pension income from federal/military/Delaware state sources receives a $2,000 exclusion under age 60 and $12,500 exclusion for age 60+ (30 Del. C. §1106). No state-level QBI; no AMT.

    No sales tax — but the Gross Receipts Tax is the cost

    Delaware is one of 5 states with no statewide sales tax. But sellers face the Gross Receipts Tax (GRT) under 30 Del. C. §2901 — applied on gross monthly/quarterly receipts with NO deductions for cost of goods, expenses, wages, or returns. Rates by classification (selected): • Retailers: 0.7468% on gross > $100,000/month exclusion • Restaurateurs: 0.6477% • Manufacturers: 0.1991% • Wholesalers: 0.3983% • Contractors: 0.6477% • Professional services: 0.3983% • Petroleum wholesalers: 0.9437% • Tobacco wholesalers: 1.9914% (highest) A $100,000 monthly receipts exclusion shields small businesses. The tax is non-deductible from federal income for income-tax purposes (it's a state-level cost-of-doing-business tax, NOT a sales tax passed through). Net effect: consumers see no 'sales tax' line, but sellers bake the GRT into prices.

    Wilmington wage tax

    The City of Wilmington imposes a 1.25% earned income tax on: • Residents (regardless of where employed) • Non-residents earning wages or self-employment income within Wilmington city limits Withheld by employers via Form WTH-WIL. No statewide local-income-tax overlay outside Wilmington — DE's only city-level wage tax.

    Why Delaware for entity formation (the franchise advantage)

    Delaware is the dominant entity-formation jurisdiction for non-residents because: 1. The Court of Chancery — specialized business court, no jury, judges with deep corporate law expertise, fast resolution 2. Predictable Delaware General Corporation Law (DGCL) and LLC Act 3. Privacy: members/managers not on public record for LLCs 4. Low franchise tax: LLCs pay $300/year flat (8 Del. C. §1108); corporations pay $175 minimum (authorized shares method) or higher under assumed par value capital method (up to $250,000 max) Delaware does NOT impose income tax on income earned outside Delaware by Delaware-formed entities (the famous 'Delaware loophole' for holding-company structures). Operating businesses physically located in Delaware DO pay Delaware income tax on their Delaware-sourced income. Out-of-state operating businesses must still register as foreign entities in their home state and pay home-state taxes — Delaware formation is a CHARTER choice, not a tax-haven for active income.

    Property tax and other levies

    Statewide average ~0.58% — among the lowest in the US. New Castle County ~0.69%, Kent ~0.51%, Sussex ~0.34%. Delaware uses a base year for assessment (Sussex 1974, Kent 1987, New Castle 1983 — being updated). Reassessments are rolling out 2024–2026. No estate tax (repealed 2018), no inheritance tax, no gift tax. Realty Transfer Tax: 4% (2.5% state + 1.5% county/municipality) on real estate transactions — among the highest in the US. First-time homebuyer reduction available.

    Worked example: Priya Iyer, Wilmington-based consulting LLC owner (single, 2026)

    Priya operates a single-member LLC in Wilmington. Net SE income $220,000 from professional services (gross receipts $260,000/year). Owns a $400,000 home in Wilmington.

    Federal: SE tax + federal income tax + QBI 20% deduction (services SSTB — phases out above $241,950 single 2026; she's likely above and gets reduced). Delaware: AGI (after federal adjustments): $220,000 Standard deduction: $3,250 Taxable: $216,750 DE income tax (applied through brackets, top rate 6.6%): approx $12,200 Wilmington 1.25% wage tax on SE income (Net Profits): $220,000 × 1.25% = $2,750 Gross Receipts Tax (professional services 0.3983%): Annual gross $260,000 − $100,000/month × 12 exclusion ($1.2M, so full exclusion) → $0 GRT owed (she's below threshold) Property tax on $400k home @ ~0.69% (New Castle): ~$2,760 Total Delaware-side state + local: ~$15,000 + property

    Statute references

    • Personal income tax brackets (top 6.6%) — 30 Del. C. §1102
    • Pension exclusion (age 60+) — 30 Del. C. §1106
    • Gross Receipts Tax (no sales tax) — 30 Del. C. §2901
    • LLC annual franchise tax ($300) — 8 Del. C. §1108
    • Corporate franchise tax — 8 Del. C. §503

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