How Delaware income tax works: AGI, seven brackets, a $3,250 deduction and $110 credits

Delaware’s income tax is built from small, old numbers. Form PIT-RES starts from federal adjusted gross income, subtracts a short list of items, takes off a standard deduction of $3,250 single or $6,500 joint, and runs what is left through seven brackets that top out at 6.6% on taxable income over $60,000. The brackets are the same whether you are single or a couple, and none of them, nor the deduction, is indexed; the rate schedule has not changed since 2014 and the deduction since 2000. In place of personal exemptions there is a $110 credit for each person on the return, plus another $110 for each spouse who is 60 or older. The Division of Revenue confirmed every one of those figures for 2026 on its own 2026 estimated-tax worksheet, so there is nothing to wait for.

Two things follow from the design. First, because the return starts from AGI, nothing the federal return does after AGI reaches Delaware. The federal standard deduction, the $6,000 senior deduction, and the new deductions for tips, overtime and car-loan interest never arrive, and Delaware taxes that income in full; the Division of Revenue said so about tips, overtime and car-loan interest on its Tax Season Updates page. Second, because the Delaware standard deduction is so low, a large share of households should itemize on the Delaware return even though they stopped itemizing federally in 2018. Delaware lets you do that.

Who files

A Delaware resident, meaning anyone domiciled here, or anyone who keeps a place of abode in Delaware and spends more than 183 days of the year in the state, files Form PIT-RES on all income from every source. A nonresident with Delaware-source income, and a part-year resident who finds it works out better, files Form PIT-NON. Delaware has no reciprocal agreement with any state, so a resident who works in Maryland, Pennsylvania or New Jersey files both returns and takes a credit on PIT-RES for the other state’s tax. The filing thresholds for a resident under 60 are $9,400 single and $15,450 joint of Delaware AGI, higher for people 60 and over; below the line it is still worth filing to recover withholding or to claim the refundable earned income credit. The return is due April 30, not April 15.

Where it starts: federal AGI

Line 1 of PIT-RES is federal adjusted gross income from Form 1040. Everything on federal Schedule 1 that reduces AGI, an IRA contribution, an HSA deposit, student loan interest, half of self-employment tax, flows through and cuts Delaware tax too. Everything below the AGI line is invisible. There is no add-back for the tips or overtime deduction, because they were never taken out of AGI. A server who owes no federal tax on $8,000 of tips still owes Delaware tax on all $8,000, at 5.55% for most workers, or $444.

The additions and subtractions

Delaware adds very little. Interest on other states’ municipal bonds is added; Delaware’s own bond interest stays exempt. Fiduciary adjustments and a few business items round out the list. The subtractions are where the return gives money back.

Line numbers are from the 2025 Form PIT-RES; the 2026 form is to come and may renumber them.

The retirement exclusion. At 60 or older, up to $12,500 per person of pensions and “eligible retirement income” comes off on line 6. Eligible retirement income is broad: IRA, 401(k), 403(b) and governmental 457 distributions, plus dividends, interest, net capital gains and net rental income. Under 60, only $2,000 of pension income qualifies, or $12,500 of a U.S. military pension. SB 219, signed August 17, 2026, raises the military figure to $15,000 for 2027 and in steps to $25,000 by 2029, and adds a Delaware-domicile requirement for everyone 60 or older who claims the exclusion; the details are in Delaware for retirees.

Social Security. Whatever portion of Social Security or Railroad Retirement was taxed federally is subtracted in full on line 8a. There is no age test and no income test.

529 and ABLE. Deposits to the state’s own DE529 plan are subtracted up to $1,000 on a single return and $2,000 on a joint one, but only if federal AGI is under $100,000 single or $200,000 joint. The federal return never asks about 529 deposits, so this is the subtraction most often left off. ABLE contributions are subtracted up to $5,000 single or $10,000 joint, with no income limit.

The deduction: standard, or itemize for Delaware only

The standard deduction is $3,250 for single, head-of-household and married-filing-separately filers, and $6,500 on a joint return. A taxpayer who is 65 or older adds $2,500, and a taxpayer who is blind adds another $2,500, to a maximum of $5,000 per person; the additions are only available with the standard deduction. These numbers are fixed in statute at 30 Del. C. §1108 and have not moved in a quarter century.

Because the standard deduction is so small, Delaware lets you itemize on Form PIT-RSA whether or not you itemized federally. The starting point is what federal Schedule A would show: medical expenses over 7.5% of AGI, state and local taxes within the federal $40,000 cap, mortgage interest, gifts to charity. Delaware then makes three changes. Delaware income tax paid comes out, whether it was withheld or paid with the return. Any other state’s income tax comes out if you claim it as a credit against Delaware tax. And up to $500 of union dues goes in. A couple with $4,000 of property tax, $8,000 of mortgage interest and $1,500 of charitable gifts has $13,500 of Delaware itemized deductions, more than double the $6,500 standard deduction, even though they took the $32,200 federal standard deduction. The $40,000 SALT cap flows through to the Delaware return, as the Division confirmed, but since Delaware’s own income tax is stripped out, the cap bites only on property tax and on other states’ income tax.

The rate

Federal AGI, plus additions, minus subtractions, is Delaware AGI. Delaware AGI minus the standard or itemized deduction is Delaware taxable income. The seven brackets then apply, and they apply identically to every filing status: a married couple hits 6.6% at the same $60,000 a single filer does. Capital gains, dividends, interest and unemployment are taxed at the same rates as wages; there is no preferred rate for gains.

From the Division of Revenue’s 2026 Form PIT-EST tax computation table. A taxpayer with $80,000 of Delaware taxable income owes $2,943 plus 6.6% of $20,000, or $4,263, before credits.

The schedule is in 30 Del. C. §1102. Bills to add higher brackets above $125,000 were filed in 2025 and died in committee; nothing was enacted for 2026, so the 2026 return uses the same table as 2025.

The credits

Delaware has no personal exemptions. In their place is the personal credit on line 27: $110 for each exemption you claimed federally, yourself, your spouse and each dependent, plus $110 more for each taxpayer or spouse who is 60 or older on December 31. A couple with two children claims $440; a retired couple both over 60 also claims $440. The credit is nonrefundable and cannot exceed the tax.

There is no state child tax credit, no renter credit, no K-12 credit and no property tax credit on the income tax return. Relief for seniors’ school property taxes is claimed at the county, not here. The family credits are covered in Credits and breaks for Delaware families.

Wilmington

The City of Wilmington levies an earned income tax of 1.25% on the wages and net profits of people who live in the city and of people who work there but live elsewhere. Wilmington employers withhold it, and it is filed with the city, not on PIT-RES. Delaware gives no credit for it, and the credit for taxes paid to another state does not cover a city tax. No other county, city or school district in Delaware has an income tax.

Withholding and estimated payments

Delaware accepts the federal Form W-4 for state withholding; your employer withholds Delaware tax from the exemptions you claim on it. Pension and IRA payers will withhold Delaware tax if asked, and for a retiree with income above the $12,500 exclusion it is usually worth asking. Anyone who expects Delaware tax after withholding to exceed $800 must pay estimates on Form PIT-EST, due April 30, June 15 and September 15 of 2026 and January 15, 2027. The safe harbor is 90% of this year’s tax or 100% of last year’s, 110% if last year’s federal AGI was over $150,000 ($75,000 married filing separately). The underpayment penalty is 1.5% a month, figured on Form PIT-UND.

How to file

The Delaware Taxpayer Portal at tax.delaware.gov files PIT-RES and PIT-NON free, with no income limit, and handles payments, estimates, extensions and refund status. Most people file through software with the federal return. Paper returns are accepted but refunds take about twelve weeks against as little as ten days for e-filed returns, and the Division does not issue refunds before mid-February. The return is due April 30, 2027. An extension to October 15, 2027 needs Form PIT-EXT, or the extension request on the Portal, filed by April 30; the federal extension does not count in its place. The extension is to file, not to pay. Tax unpaid after April 30 draws interest at 0.5% a month, and a late-filed return with a balance due draws a penalty of 5% a month.

What trips people up

• Taking the $6,500 standard deduction when $12,000 of property tax, mortgage interest and charity was sitting on a federal return that did not itemize.
• Expecting the federal tips, overtime, car-loan or senior deduction to reduce Delaware tax. None of them reach the return.
• The $12,500 exclusion claimed on an IRA withdrawal by someone under 60. Under 60, only pension income qualifies, and only $2,000 of it.
• Both spouses’ retirement income lumped under one $12,500. The exclusion is per person, figured separately.
• A DE529 contribution nobody mentioned, because the federal return did not ask.
• The Delaware EITC taken at 20% nonrefundable when 4.5% refundable would have put money back.
• A federal Form 4868 extension treated as a Delaware extension. It is not; file PIT-EXT.
• Estimates skipped on a large capital gain, then a 1.5%-a-month penalty.
• Bonus depreciation on a Schedule C or E carried in at the federal 100% when Delaware allows 20% for 2026; see What’s new in Delaware for 2026.