Delaware tax deductions and write-offs (2026)

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.

Partly. 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.

No. Delaware excludes Social Security and Railroad Retirement benefits from taxable income, with no age or income limit. This is separate from Delaware's pension exclusion of up to $12,500 for people 60 and older.

Yes: Delaware offers the Delaware Earned Income Tax Credit, Choose either a refundable credit of 4.5% of the federal EITC or a nonrefundable credit of 20% of the federal EITC (refundable). Refundable only under the 4.5% option. The 20% option is nonrefundable and capped at Delaware tax owed; Schedule II (PIT-RSS) picks the option that applies. Must claim the federal EITC.

Rarely: Delaware has no statewide sales tax, so deducting state income tax is almost always bigger. No sales tax; titling a vehicle carries a motor vehicle document fee of 5.25% of the purchase price (raised from 4.25% on Oct. 1, 2025), which is a fee rather than a sales tax.

Yes on your federal return if you itemize, within the $40,400 SALT cap. Delaware adds its own break: Senior School Property Tax Credit: 50% of school property tax, up to $500, for homeowners 65+ on their primary residence.

No: Delaware doesn't offer a renter's credit or rent rebate. Delaware has no state tax credit, deduction, or rebate specifically for renters. Delaware's senior school property tax credit goes only to homeowners age 65+; renters do benefit from Delaware having no state sales tax. Lower-income renters can still claim Delaware's earned income credit: Choose either a refundable credit of 4.5% of the federal EITC or a nonrefundable credit of 20% of the federal EITC.

No: Delaware doesn't base registration on your car's value, so it isn't deductible as personal property tax. Passenger vehicle registration is a flat $40 per year; the 5.25% document fee is a one-time charge at titling.

Delaware taxes income up to 6.6% and has no sales tax.

Yes on your Delaware return: $1,000 single / $2,000 joint per return; federal AGI <= $100k single / $200k joint. Only contributions to the state's own plan count. DE529 only; no deduction for contributions intended for K-12 tuition, rollovers, or beneficiary changes.

No state child tax credit, but Delaware has a child care credit: 50% of the federal child and dependent care credit. Nonrefundable. Personal credit of $110 per dependent. Delaware does have an earned income credit: Choose either a refundable credit of 4.5% of the federal EITC or a nonrefundable credit of 20% of the federal EITC.

Yes, as a business expense: Delaware charges $110 to form an LLC; ongoing: None (no annual report for LLCs). $400 annual LLC tax. Due June 1; $200 late penalty plus 1.5%/month interest. Raised from $300 by HB 400 effective for tax year 2026 (first $400 payment due June 1, 2027).