The Wilmington, Delaware city tax rate is a flat 1.25 percent on earned income and net business profits, plus a municipal property tax of 4.5577 mills for fiscal year 2026 and a $15 per-employee monthly head tax on larger employers. Wilmington is the only city in Delaware that levies a local earned income tax, so if you live or work anywhere else in the state, none of this applies to your wages.
The 1.25 Percent Wage Tax
Wilmington’s earned income tax is a flat 1.25 percent on gross earned income. The rate doesn’t change with income level, so someone making $35,000 pays the same percentage as someone earning $350,000. The city doesn’t set the rate on its own; the Delaware General Assembly establishes it by statute, which means any change has to happen at the state level.1City of Wilmington Budget Office. City of Wilmington Tax Rates Fiscal Year 2025
Who Owes It
Two groups pay the wage tax: Wilmington residents and nonresidents who physically work inside the city.1City of Wilmington Budget Office. City of Wilmington Tax Rates Fiscal Year 2025 If you live within city limits, you owe 1.25 percent on all your earned income, no matter where your employer sits. If you live outside Wilmington but commute to a job site in the city, you owe the tax on the income you earn there.
What matters is where the work is actually performed, not where the employer is headquartered. A nonresident working a hybrid schedule only owes tax on income earned during days physically spent in Wilmington, which makes tracking your work location important for getting the number right.
What Income Is Taxed
The wage tax applies to active compensation: W-2 wages, salaries, bonuses, and commissions. Passive income is excluded. Social Security benefits, pension distributions, unemployment compensation, bank interest, stock dividends, and capital gains from investments are not subject to the city wage tax. Retirees living in Wilmington generally don’t pay this tax on their retirement income.
Net Profits Tax for the Self-Employed
Sole proprietors and partnerships operating in Wilmington pay a separate net profits tax at the same 1.25 percent rate.1City of Wilmington Budget Office. City of Wilmington Tax Rates Fiscal Year 2025 The important distinction is the base: net profits tax applies to business income after allowable expenses, not gross receipts. Self-employed filers report on Form WCWT-6. New businesses need to establish a taxpayer account with the city’s finance department using the Earned Income Taxpayer Account Application.2City of Wilmington, DE. City Wage and Net Profits Taxes
How the Tax Gets Paid
Employers operating in Wilmington do most of the work. They withhold 1.25 percent from each paycheck and remit it to the city. Employers withholding $50 or more per month remit monthly; those collecting under $50 can remit quarterly. Annual reconciliation and W-2 filings with the city follow at year end.1City of Wilmington Budget Office. City of Wilmington Tax Rates Fiscal Year 2025
If your employer doesn’t withhold the Wilmington tax, often because the company is based outside the city, you have to report and pay it yourself. Residents in that situation set up a self-reporting taxpayer account using the city’s Self-Reporting Employee application.2City of Wilmington, DE. City Wage and Net Profits Taxes
Filing Deadline
The annual filing deadline for Wilmington wage and net profits tax returns generally tracks the Delaware state income tax calendar. For 2025 tax year returns, the Delaware state filing deadline is April 30, 2026.3Division of Revenue – State of Delaware. Tax Rate Changes Even if your employer withheld the right amount all year, you may still need to file a reconciliation return. A federal extension via IRS Form 4868 filed before April 15 can buy you more time to file, but it doesn’t extend the deadline to pay. Interest can start accruing on anything you owe even while an extension is in effect.
Refunds for Nonresidents Who Work Remotely
Hybrid work creates situations where nonresidents have too much Wilmington tax withheld. If your employer withholds on your full paycheck but you only worked in the city part of the time, you can request a refund for the days you worked elsewhere. The city uses Form WCWT-5, the Application for Refund, and has published a guidance document titled “Earned Income Tax Refunds for Non-resident Employees Guidance and Frequently Asked Questions.”2City of Wilmington, DE. City Wage and Net Profits Taxes Expect to document which days you worked outside city limits. Detailed location records, whether from an employer’s scheduling system or your own log, are what separates an approved refund from a denied one.
Penalties for Late Payment
Unpaid Wilmington wage tax accrues interest monthly. Prolonged non-payment can bring additional penalties and legal collection action by the city. Employers who fail to withhold or remit face their own compliance consequences. The straightforward way to stay clear is to verify your employer is withholding correctly, or if you’re self-employed, make timely estimated payments through the year rather than waiting for the bill at filing time.
Wilmington Property Tax
Wilmington’s municipal property tax rate for fiscal year 2026, covering July 1, 2025 through June 30, 2026, is 4.5577 mills, or roughly $4.56 per $1,000 of assessed value.4Wilmington City Council. Property Tax Ordinance for Fiscal Year 2026 Assessed value in Delaware is often well below market value, so the effective tax relative to a home’s sale price tends to run lower than the mill rate alone suggests. Wilmington property owners also pay New Castle County property taxes on top of the city levy.
Head Tax on Employers
Businesses licensed to operate in Wilmington with more than five employees working inside city limits pay a head tax of $15 per month for each employee above the first five.5City of Wilmington. Incentives Offered by the City of Wilmington This cost falls on the employer, not the worker, but it factors into the total tax picture for anyone running a business in the city.
How City Tax Fits with Delaware State Income Tax
The 1.25 percent Wilmington wage tax sits on top of Delaware’s state income tax, which uses graduated brackets. State rates start at zero on the first $2,000 of taxable income and reach a top rate of 6.6 percent on income above $60,000.3Division of Revenue – State of Delaware. Tax Rate Changes Delaware has no state sales tax, which offsets some of the combined income tax load.
For a Wilmington resident earning $75,000, the rough math is a state income tax bill in the neighborhood of $3,900 plus $937.50 in city wage tax (1.25 percent of $75,000). The city tax isn’t large in isolation, but it adds up across a career and is worth factoring into take-home pay when you compare job offers or weigh where to live.