Delaware retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 6.6%Delaware has rates from 0% on income under $2,000 to 6.6% on income of $60,000 or more. |
|---|---|
| Social Security | Not taxedDelaware does not tax Social Security or Railroad Retirement benefits. |
| Pensions | Partly taxedPeople 60+ can exclude up to $12,500 of pension and eligible retirement income combined; under 60 the pension exclusion is $2,000. Exclusion: up to $12,500 (age 60+). |
| 401(k) and IRA withdrawals | Partly taxedIRA and 401(k) distributions count as eligible retirement income within the $12,500 exclusion at 60+; amounts above are taxed. |
| Government pensions | Partly taxedGovernment pensions use the same $12,500 (60+) or $2,000 (under 60) exclusion. |
| Military retirement pay | Partly taxedMilitary retirees can exclude up to $12,500 of military pension (also under age 60), but only one pension exclusion per person. |
| Estate tax | No |
| Inheritance tax | No |
| Property tax help for seniors | Homeowners 65+ may get a school property tax credit of 50% up to $500 on their home; people who moved to Delaware after 2018 need 10 years of residency. |
| Sales tax | Delaware has no sales tax. |
Recent changes and good to know
- SB 219, signed 2026-08-17, raises the military pension exclusion to $15,000 (2027), $20,000 (2028) and $25,000 (2029+), regardless of age. It does not change 2026.
How to lower your retirement taxes in Delaware
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Delaware too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Delaware tax retirement income?
Partly: Delaware exempts Social Security and lets people 60+ exclude $12,500 of pension and retirement income, then taxes the rest at up to 6.6%.
Does Delaware tax Social Security?
Delaware does not tax Social Security or Railroad Retirement benefits.
Does Delaware tax pensions?
People 60+ can exclude up to $12,500 of pension and eligible retirement income combined; under 60 the pension exclusion is $2,000.
Does Delaware tax 401(k) and IRA withdrawals?
IRA and 401(k) distributions count as eligible retirement income within the $12,500 exclusion at 60+; amounts above are taxed.
Does Delaware tax military retirement pay?
Military retirees can exclude up to $12,500 of military pension (also under age 60), but only one pension exclusion per person.
Sources (last verified 2026)
- Personal Income Tax FAQs — Delaware Division of Revenue (2026-09-24)
- Delaware State Taxes 2026 — AARP (2026)
- Military Pension Tax Exemption Signed Into Law — WGMD (2026-08)
- State Legislators Actively Support Delaware's Military Veterans — Delaware House Republicans (2026-09-11)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.