What Are the Taxes in Delaware? Income, Property, and Business

Taxes in Delaware include a graduated personal income tax that tops out at 6.6%, local property taxes assessed by the three counties and school districts, a realty transfer tax on home sales, excise taxes on fuel and tobacco, and, on the business side, an 8.7% corporate income tax, a gross receipts tax, and an annual franchise tax for Delaware-incorporated companies. There is no statewide sales tax, no state-level property tax, and no estate or inheritance tax. The overall load is lighter than most neighboring states, but it is not a zero-tax state.

Personal Income Tax

Delaware taxes income on a graduated scale, with the first $2,000 of taxable income exempt. Rates above that threshold:

2.2% on taxable income from $2,001 to $5,000
3.9% on $5,001 to $10,000
4.8% on $10,001 to $20,000
5.2% on $20,001 to $25,000
5.55% on $25,001 to $60,000
6.6% on income above $60,000

These brackets have been in place since the 2014 tax year.¹ Your starting point is federal adjusted gross income, adjusted for Delaware-specific additions and subtractions, then reduced by deductions.

The standard deduction is $3,250 for single filers and $6,500 for married couples filing jointly.² Both figures sit well below the federal standard deduction, so Delaware residents who take the federal standard deduction sometimes still come out ahead by itemizing on their state return.

Non-residents who earn income from Delaware sources owe tax only on that portion, calculated by comparing Delaware income to total federal income. Employer withholding covers most wage earners. Annual returns are due April 30.³

If you are self-employed or have other income that is not withheld, Delaware requires estimated payments when your expected tax bill after withholding exceeds $800. The four installments are due April 30, June 15, September 15, and January 15. Farmers and fishermen who earn at least two-thirds of their gross income from those activities can make a single payment by January 15 instead.

No Statewide Sales Tax

Delaware is one of five states with no statewide sales tax. There is no sales tax line on any receipt in Delaware, whether you are buying groceries, electronics, or clothing, and that holds at the state, county, and municipal level.⁴ The savings are real, though not always as large as the sticker suggests: businesses pay a gross receipts tax on their revenue, and some fold that cost into retail prices.

Because the state imposes no sales tax, it also has no economic nexus rules forcing out-of-state online sellers to collect Delaware tax. Sellers based elsewhere do not owe Delaware sales tax, though a physical presence or substantial activity in the state can trigger a gross receipts tax obligation.

Property Taxes

Delaware does not charge a state-level property tax. All real property taxes are set locally by the three counties, New Castle, Kent, and Sussex, and by the school districts. Owners receive separate annual bills for county government taxes and for school taxes.

Delaware property tax bills tend to be lower than those in surrounding states because assessments in all three counties still use property values from decades ago rather than current market values. New Castle County’s assessments, for example, reflect values from 1983. The gap between assessed value and market value keeps effective tax bills down even when the nominal rate looks comparable to a neighboring state’s. Unpaid property taxes trigger penalties and can eventually result in a lien against the property.

Realty Transfer Tax

When real property changes hands in Delaware, both buyer and seller owe a realty transfer tax. The base state rate is 2.5% of the property’s value where the local municipality or county has enacted its own transfer tax at the full authorized level; where no local transfer tax exists, the state rate is 3%.⁵ All three counties have enacted their local transfer tax, so most transactions carry a combined rate near 4%.

By default the tax splits equally between buyer and seller, but the parties can agree to a different allocation in the purchase contract.⁵ On a $350,000 home, the combined transfer tax can easily exceed $14,000. First-time buyers and purchases below certain value thresholds may qualify for exemptions or reduced rates, so check eligibility before closing.

Excise Taxes

Delaware imposes targeted excise taxes on specific products, collected from wholesalers and distributors rather than at the register.

Cigarettes: $2.10 per pack of 20.⁶
Motor fuel: 23 cents per gallon on gasoline.⁷
Alcoholic beverages: beer, wine, and spirits are taxed at varying rates at the wholesale level.

These costs reach the shelf price by the time you pay, so you are paying them even without a separate line on the receipt. Petroleum retailers and wholesalers also face hazardous substance cleanup surcharges on top of the base gross receipts rate.

No Estate or Inheritance Tax

Delaware repealed its state estate tax effective January 1, 2018.⁸ The state also imposes no inheritance tax on people who receive property from a deceased person’s estate. Neither the estate nor the individual beneficiaries owe anything to Delaware when someone dies. Federal estate tax rules still apply separately.

Taxes on Businesses

Three distinct taxes affect Delaware businesses, and they get confused with one another constantly.

Corporate Income Tax

Every corporation doing business in Delaware or earning income from property in the state owes an 8.7% corporate income tax on the taxable income apportioned to Delaware.⁹ Apportionment weighs property, wages, and sales in Delaware against the corporation’s totals everywhere. The rate applies to C-corporations. S-corporations, partnerships, and LLCs taxed as partnerships do not pay this tax at the entity level; the income flows through to the owners’ personal returns.

Gross Receipts Tax

In place of a sales tax, Delaware taxes businesses on total revenue through a gross receipts tax. The tax applies to the seller’s full receipts from goods or services with no deduction for cost of goods sold or any other expense. Every business operating in the state must first obtain a license from the Department of Finance.¹⁰

Rates depend on business activity. Retailers pay 0.7468% of gross receipts; wholesalers pay 0.3983%; contractors, food service, and professional services each have their own rates. Most businesses get a monthly exclusion that shields a portion of revenue from the tax, set at $100,000 per month for retailers and wholesalers.¹¹ Returns are filed monthly or quarterly through the Division of Revenue.

Franchise Tax

The franchise tax has nothing to do with franchise restaurants. It is an annual tax every corporation incorporated in Delaware owes the Secretary of State for the privilege of existing as a Delaware corporation, even if the company does zero business in the state.

Delaware uses two calculation methods and bills whichever produces the lower result:¹²

Authorized Shares Method. Corporations with up to 5,000 authorized shares pay the minimum $175. The tax rises to $250 for 5,001 to 10,000 shares, then increases by $85 for every additional 10,000 shares or portion thereof, up to a maximum of $200,000.
Assumed Par Value Capital Method. This formula multiplies issued shares, authorized shares, and total gross assets to derive an assumed par value capital figure, taxed at $400 per $1 million or portion thereof, with a minimum of $400.

The default bill from the state uses the authorized shares method, which can produce startling numbers for startups that authorized millions of shares. Recalculating under the assumed par value method is the first thing to check if the bill looks absurd. Non-stock corporations that are not tax-exempt pay a flat $175 annually. Exempt non-profit and religious organizations owe no franchise tax but file an annual report with a $25 fee. Other corporations pay a $50 annual report filing fee on top of their franchise tax.¹³

1
Justia. Delaware Code Title 30 Section 1102 – Imposition and Rate of Tax
2
Justia. Delaware Code Title 30 Section 1108 – Standard Deduction
3
State of Delaware. Delaware’s Tax Season Starts January 26, 2026
4
Division of Revenue – State of Delaware. Doing Business in Delaware
5
Delaware Code Online. Delaware Code Title 30 Chapter 54 – Realty Transfer Tax
6
Division of Revenue – State of Delaware. Cigarette and Tobacco Tax FAQs
7
Justia. Delaware Code Title 30 Section 5110 – Levy and Rate of Tax
8
Delaware Code Online. Delaware Code Title 30 Chapter 15 – Estate Tax (Repealed)
9
Division of Revenue – State of Delaware. Filing Corporate Income Tax
10
Justia. Delaware Code Title 30 Section 2101 – General License Requirement for Occupations
11
State of Delaware. Detailed List of Division of Revenue Licenses and Tax Rates
12
Delaware Code Online. Delaware Code Title 8 Chapter 5 – Corporation Franchise Tax
13
State of Delaware. Corporate Franchise Tax Information