Credits and breaks for Delaware families: the EITC choice, child care, $110 a head and the DE529 subtraction

Delaware’s help for families is modest and easy to miss. Each dependent is worth a $110 nonrefundable credit on Form PIT-RES, the same credit the taxpayer and spouse get; there is no separate child tax credit. Parents who pay for child care get a credit equal to 50% of the federal child and dependent care credit, nonrefundable. Working families who qualify for the federal earned income credit choose each year between two Delaware versions: 4.5% of the federal credit, refundable, or 20% of it, nonrefundable. And deposits to the state’s DE529 plan are subtracted from income, up to $1,000 single or $2,000 joint, for households under $100,000 or $200,000 of federal AGI. Everything else a family might expect, a dependent exemption, a K-12 tuition credit, a renter credit, a child credit, Delaware does not have. The federal credits are where the money is; Delaware adds a few hundred dollars around the edges.

One structural point shapes all of it. Delaware starts from federal adjusted gross income and has a small standard deduction, $3,250 for a single parent or $6,500 for a couple, so a family’s wages are taxed almost from the first dollar, at 2.2% from $2,000 of taxable income and 5.55% from $25,000. The brackets do not widen for a joint return or a head of household. A family of four at $90,000 pays about $4,000 of Delaware tax; the credits below are measured against that.

$110 for each person on the return

Line 27a of PIT-RES multiplies the number of exemptions claimed on the federal return, the taxpayer, the spouse and each dependent, by $110. A couple with three children claims $550. The credit is nonrefundable and cannot exceed the tax. It is the same whether the dependent is a newborn, a college student or an elderly parent, and it does not phase out at any income. A dependent who files a return of his own gets no $110 of his own; the credit follows the federal exemption, which belongs to the parent.

Child and dependent care: half the federal credit

Line 31 gives a Delaware credit of 50% of the child and dependent care credit computed on federal Form 2441, which must be attached. The credit is nonrefundable and residents only; a nonresident or a part-year resident who files PIT-NON cannot take it. Because the Delaware credit rides on the federal one, every change to the federal credit changes Delaware’s automatically. The July 2025 federal law raised the federal credit rate to as much as 50% of qualifying expenses for lower-income families, phasing down with income, and raised the dependent care FSA limit to $7,500; both reach Delaware without a vote, the first through Form 2441 and the second through a smaller federal AGI. A family that pays $6,000 for care of two children and earns a 38% federal rate gets a $2,280 federal credit and a $1,140 Delaware credit.

The earned income credit: pick one each year

Delaware’s EITC, at 30 Del. C. §1117, offers two versions and lets you choose on Schedule II every year:

• Refundable, 4.5% of the federal EITC. If it exceeds your Delaware tax, the difference is paid to you.
• Nonrefundable, 20% of the federal EITC. It reduces Delaware tax to zero but no further.

The arithmetic that decides it is simple. The 20% version is worth whichever is less, 20% of the federal credit or your remaining Delaware tax. The 4.5% version is worth 4.5% of the federal credit no matter what. So the 20% version wins whenever your Delaware tax, after the $110 credits and the child care credit, is more than 4.5% of the federal EITC, and the 4.5% version wins only when Delaware tax is already near zero. A family with a $4,000 federal EITC and $600 of Delaware tax left takes the 20% version and wipes out the $600; a family with the same federal credit and $50 of Delaware tax left takes the 4.5% version, clears the $50 and gets $130 back. Software should run both; the PIT-RES instructions walk through the comparison on Schedule II. Residents and part-year residents filing PIT-RES can claim it; nonresidents on PIT-NON cannot.

The break-even is Delaware tax equal to 4.5% of the federal credit. Above it, take 20%; below it, take 4.5%.

No child tax credit, no K-12 credit

The federal child tax credit, $2,200 per child for 2026, has no Delaware counterpart; the $110 personal credit is all a dependent brings. There is no credit or subtraction for private school tuition, homeschool costs or school fees, and no credit for a child’s college tuition. The federal American Opportunity and Lifetime Learning credits reduce federal tax only. Scholarships, and the tax-free treatment of 529 withdrawals used for tuition, flow through because they never enter federal AGI.

DE529 and ABLE: the subtraction nobody asks about

Line 8b subtracts contributions to the Delaware 529 Education Savings Plan, up to $1,000 on a single, head-of-household or separate return and $2,000 on a joint return. The subtraction is not allowed at all if federal AGI is $100,000 or more single or $200,000 or more joint; it is a cutoff, not a phase-out. Only the state’s own plan qualifies. At the 5.55% rate the $2,000 subtraction is worth $111; at 6.6% it is worth $132. Contributions to a Delaware ABLE account for a family member with a disability are subtracted up to $5,000 single or $10,000 joint, with no income limit. The federal return asks about neither, which is why both are routinely left off.

Filing status and dependents’ returns

Delaware filing status follows the federal return, and head of household gets the same $3,250 standard deduction as single; there is no wider deduction or bracket for a head of household. Married couples may file jointly or separately on the Delaware return, and because the brackets are the same for every status, two earners with similar incomes sometimes owe less filing separately; the PIT-RES has columns for it. A dependent child with a summer job must file a Delaware return once Delaware AGI exceeds $5,250 (verify), and should file below that to recover withholding.

What the federal law changed that reaches families here

Because Delaware starts from federal AGI and ties its child care credit to Form 2441, the July 2025 federal law reaches Delaware families in two ways and misses them in two others. The larger federal child and dependent care credit flows straight into the Delaware 50% credit. The higher dependent care FSA limit lowers federal AGI and so lowers Delaware tax. But the federal deductions for tips and overtime, which many working parents claim, do not reach Delaware; the Division of Revenue said on its Tax Season Updates page that they are not itemized deductions and do not flow through. A parent who works overtime owes Delaware tax on all of it. And the larger federal child tax credit changes nothing here, since Delaware has no child credit to begin with.