Wilmington, Delaware charges a 1.25% earned income tax on wages and net business profits, a monthly head tax on businesses with more than five employees in the city, and a property tax on real estate inside city limits. The Wilmington city tax most people are asking about is the wage tax, and it’s due by April 15 each year on the same schedule as federal returns.
Who Owes the Wage Tax
Two groups pay. If Wilmington is your primary home, you owe the 1.25% on all of your earned income, even if your job sits outside the city. If you live elsewhere but physically work inside city limits, you owe on the portion earned while working in Wilmington.
Employers with operations in the city withhold the tax from paychecks and remit it, whether the employee is a resident or a commuter. Independent contractors who perform services in Wilmington handle payment themselves rather than through an employer.
What Counts as Taxable Income
The tax hits active earnings: gross wages, salaries, commissions, bonuses, and incentive pay. For self-employed people and partnerships, it applies to net profits from business activity in the city.1City of Wilmington. City of Wilmington Tax Rates Fiscal Year 2025
Passive and retirement income is exempt. Bank interest, dividends, capital gains, Social Security, pensions, and unemployment compensation are not subject to the city wage tax. The rough test: if you earn it by showing up and working, it’s taxable; if it comes from investments or retirement, it isn’t.
How Much You Owe
Multiply taxable earned income by 1.25%. On $50,000 of wages, that’s $625 for the year. If your employer withheld city tax during the year, subtract that from the total; you pay the balance or claim a refund if too much came out.1City of Wilmington. City of Wilmington Tax Rates Fiscal Year 2025
The 1.25% rate is set by the Delaware General Assembly rather than the city council, and the same rate applies to both wage income and net business profits.1City of Wilmington. City of Wilmington Tax Rates Fiscal Year 2025
How to File and Pay
Returns are due April 15.2New Castle County. City of Wilmington Tax Information Individuals use the Earned Income Tax Return; businesses use the Net Profits Tax Return. Both forms are on the city’s wage and net profits tax page.3City of Wilmington. City Wage and Net Profits Taxes You’ll need your W-2 if you’re an employee, 1099-NEC or 1099-MISC if you’re a contractor, and a federal Schedule C if you’re filing net profits.
You can file and pay online through the city’s Paymentus-powered portal, which accepts bank transfer or credit card. Credit card payments carry a convenience fee from the processor.4City of Wilmington. Forms and Applications Library The portal gives you immediate confirmation; save it as proof of timely filing. Personal checks and money orders are accepted by mail, with the current address printed on the city’s forms.3City of Wilmington. City Wage and Net Profits Taxes
Getting a Refund for Over-Withholding
If your employer withheld more city tax than you actually owe, you can get the excess back. The most common case is a non-resident whose employer withheld on income earned at a work location outside the city. File Form WCWT-5, Application for Refund, available on the city’s wage tax page.3City of Wilmington. City Wage and Net Profits Taxes
Plan to show where the work actually happened. Employer records, a remote-work agreement, or anything that documents your physical work location supports the claim.
What Happens If You File Late or Don’t Pay
Missing April 15 or underpaying triggers both interest on the unpaid balance and a separate late-filing penalty. Both accumulate monthly, so a bill grows the longer it sits. If the obligation is ignored, the city can place a tax lien on your property or go through the courts to collect. Settling before it reaches that stage is cheaper and less disruptive than clearing a lien later.
The Business Head Tax
Wilmington also charges a head tax on larger employers. A licensed business with more than five employees in the city pays $15 per month for each employee above the five-person threshold.5City of Wilmington. Doing Business in the City of Wilmington A company with 20 Wilmington employees pays on 15. Businesses with five or fewer city employees are exempt.
The head tax is a cost to the business, not a withholding from the worker’s pay, and it’s separate from the 1.25% wage tax.
Property Tax
Real estate inside the city is billed separately. For fiscal year 2026, the city property tax rate is 4.5577 mills, or about $4.56 per $1,000 of assessed value.6Wilmington City Council. Property Tax Ordinance for Fiscal Year 2026 Assessed value is not market value; Wilmington’s assessments come from older valuations that typically run well below current sale prices, so the effective burden on a home’s market value is lower than the millage alone suggests. Owners are billed directly and can pay through the same Paymentus portal or by mail.
Business Licensing That Triggers These Taxes
Operating in Wilmington requires both a Delaware state business license and a separate city business license.5City of Wilmington. Doing Business in the City of Wilmington The state license and a withholding account for employees are handled through the Delaware One Stop portal.7Delaware One Stop. Register and License Your Business to Operate in Delaware For the city license, call the Wage/Business License Division at (302) 576-2415. The city license is what formally sets off your obligation to withhold wage tax from employees and file net profits returns; skipping it doesn’t avoid the tax, only delays it with penalties attached.