Military retirement pay in Delaware
Varies
Does Delaware Tax Military Retirement Pay?
Short answer: Partly. For 2026, retirees under age 60 can exclude up to $12,500 of military pension (versus $2,000 for other pensions), and retirees 60 and older get the general $12,500 pension and retirement income exclusion, which includes military pay. SB 219 (signed Aug. 17, 2026) raises the military pension exclusion to $15,000 for 2027, $20,000 for 2028, and $25,000 for 2029 and later. Retirees 60 and older must meet a Delaware residency requirement: 3 years if domiciled before Jan. 1, 2027, or 5 years if domiciled after. No change for tax year 2026. Other retirement income: Taxpayers 60+ may exclude up to $12,500 per person of pensions and eligible retirement income (including 401(k) and IRA withdrawals). Taxpayers under 60 may exclude up to $2,000 of pension income.
Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Military retirement pay in Delaware
Varies
Individuals / Personal Taxes
Partly. For 2026, retirees under age 60 can exclude up to $12,500 of military pension (versus $2,000 for other pensions), and retirees 60 and older get the general $12,500 pension and retirement income exclusion, which includes military pay. SB 219 (signed Aug. 17, 2026) raises the military pension exclusion to $15,000 for 2027, $20,000 for 2028, and $25,000 for 2029 and later. Retirees 60 and older must meet a Delaware residency requirement: 3 years if domiciled before Jan. 1, 2027, or 5 years if domiciled after. No change for tax year 2026. Other retirement income: Taxpayers 60+ may exclude up to $12,500 per person of pensions and eligible retirement income (including 401(k) and IRA withdrawals). Taxpayers under 60 may exclude up to $2,000 of pension income.
Business justification
Partly. For 2026, retirees under age 60 can exclude up to $12,500 of military pension (versus $2,000 for other pensions), and retirees 60 and older get the general $12,500 pension and retirement income exclusion, which includes military pay. SB 219 (signed Aug. 17, 2026) raises the military pension exclusion to $15,000 for 2027, $20,000 for 2028, and $25,000 for 2029 and later. Retirees 60 and older must meet a Delaware residency requirement: 3 years if domiciled before Jan. 1, 2027, or 5 years if domiciled after. No change for tax year 2026. Other retirement income: Taxpayers 60+ may exclude up to $12,500 per person of pensions and eligible retirement income (including 401(k) and IRA withdrawals). Taxpayers under 60 may exclude up to $2,000 of pension income. Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Category
- Personal Tax Deductions