What’s new in Delaware for 2026: a quiet return with two exceptions

For most Delaware households the 2026 return will look like the 2025 return. The seven brackets, the $3,250 standard deduction and the $110 personal credit are unchanged; the Division of Revenue printed the same figures on its 2026 estimated-tax worksheet, and none of them is indexed. The news is in what the state refused. The federal deductions for tips, overtime and car-loan interest never reach Form PIT-RES, because Delaware starts from federal adjusted gross income and those deductions come off after it. The $40,000 SALT cap does reach Delaware itemizers. Business owners lose 100% bonus depreciation on anything placed in service after December 31, 2025, under House Bill 255. And a bill sold as a military pension increase, Senate Bill 219, wrote a three-year Delaware domicile requirement into the $12,500 retirement exclusion for everyone 60 or older, with no word yet from the Division on how it applies to 2026 returns.

Delaware adopts the Internal Revenue Code as it changes, unless the General Assembly steps in. The Division of Revenue put it this way in Technical Information Memorandum 2025-02: “absent legislative action, Delaware conforms with Federal tax law.” So the question for every piece of the 2025 federal law is simple. Does it change federal AGI? If it does, Delaware follows it automatically unless a bill says otherwise. If it comes after AGI, it never shows up on the Delaware return at all. Most of the headline provisions come after AGI.

What reaches the Delaware return, and what does not

The Division of Revenue named tips, overtime and car-loan interest on its Tax Season Updates page: they “are not defined federally as itemized deductions and will not flow through to the Delaware Personal Income Tax.” It did not name the senior deduction, but the same rule governs it.

The practical effect is that a Delaware worker with $15,000 of tips pays no federal income tax on them and full Delaware tax on them, at rates that reach 5.55% above $25,000 of taxable income and 6.6% above $60,000. There is no add-back to make, because the income never left. The W-2 wage figure is what Delaware taxes, as it always was.

House Bill 255: bonus depreciation, decoupled

This is the only piece of the 2025 federal law the General Assembly acted on, and it was done for the budget. The federal law made 100% bonus depreciation permanent and added a new 100% allowance for “qualified production property,” and because depreciation is figured inside business income, both would have flowed straight into Delaware AGI. House Bill 255, signed November 19, 2025, as chapter 231 of volume 85 of the Laws of Delaware, stops that. For individuals, including partners and S corporation shareholders, Delaware decouples from the federal allowance for property acquired and placed in service after December 31, 2025. Property placed in service in 2025 is not affected; a 2025 purchase keeps its federal treatment on the 2025 Delaware return.

What Delaware allows instead is the old phase-down schedule from the 2017 federal law: 20% bonus depreciation for property placed in service in 2026 and none from 2027 on, with regular depreciation on the rest. The decoupling runs through property placed in service by December 31, 2030, after which Delaware rejoins the federal rules. Section 179 expensing is not touched, so a small business that can cover its purchases with Section 179 will see no Delaware difference at all. Research and experimental costs are the other direction: Delaware conforms to the federal return to immediate expensing for 2025 and later.

The Division has not yet published the 2026 Form PIT-RES, so where the addback goes is not known. Expect an addition line, or an adjusted Schedule K-1 from any partnership or S corporation. Over the life of the asset the total Delaware deduction is the same as the federal one; the state is refusing to allow it all in one year, not refusing to allow it.

Senate Bill 219: more for military pensions, and a residency test for everyone at 60

Senate Bill 219 was signed August 17, 2026, as chapter 426 of volume 85, and it does what its sponsors said: it raises the exclusion for a United States military pension, available at any age, from $12,500 to $15,000 for 2027, $20,000 for 2028 and $25,000 for 2029 and later. For 2026 the military figure stays at $12,500. The statute applies the limit to each spouse separately on a joint return.

The same act added a sentence to section 1106(b)(3) of Title 30 that was not in the headlines. A person 60 or older may claim the pension and eligible-retirement-income exclusion only if “legally domiciled in this State for at least 3 years,” and anyone who becomes domiciled on or after January 1, 2027 must wait five years. As written, the sentence is not limited to military pensioners. It covers every claimant 60 or older, which means every retiree who uses the $12,500 to shelter IRA withdrawals, dividends, interest or capital gains. The act took effect on signature, in the middle of tax year 2026, and the Division of Revenue has issued nothing on whether the test applies to 2026 returns, how PIT-RES will ask for it, or whether a recent arrival who claimed the exclusion for 2025 loses it for 2026.

If you moved to Delaware in 2024 or later and are 60 or older, treat the 2026 exclusion as uncertain until the Division speaks. If you have been a Delaware resident for three years or more, nothing changes. The exclusion for people under 60, $2,000 of pension or $12,500 of military pension, carries no domicile test.

What else to expect on the 2026 return

The Delaware EITC choice is still a choice. Residents pick each year between a refundable credit of 4.5% of the federal EITC and a nonrefundable credit of 20%. The 20% version is worth more whenever Delaware tax before the credit exceeds 4.5% of the federal credit, which is most two-earner households; the 4.5% version pays cash to a family with little or no Delaware tax. Run both.

Itemizing for Delaware alone is still allowed. With only $3,250 or $6,500 to beat, many households that take the federal standard deduction should itemize on Form PIT-RSA. The 2025 form shows the $40,000 SALT cap on line 5f and lets state income tax count only to the extent it is not claimed as a credit elsewhere on PIT-RES; the Division confirmed the cap flows through.

No ballot measure, no local change. Delaware has no initiative process and nothing tax-related was on the November 3, 2026 ballot. The City of Wilmington’s earned income tax, 1.25%, is unchanged and remains a separate city filing with no Delaware credit.

Due dates. The 2026 return is due April 30, 2027, not April 15. A federal extension does not extend the Delaware return; Form PIT-EXT or the extension request on the Delaware Taxpayer Portal must be filed by April 30 to get to October 15, 2027, and the tax is still due April 30.