Does Delaware Tax Pensions and Social Security? Free Tax Calculator
Retirees considering Delaware should look at how different types of retirement income are treated under the state’s tax code, as
- Pensions
- Retirement plan distributions and
- Social Security benefits may not receive the same treatment.
Delaware follows federal taxable income rules as a starting point for many retirement income sources, with state-specific adjustments.
Table 1. Delaware Tax Treatment of Common Retirement Income Sources
| Income Source | Delaware Tax Treatment | Explanation |
|---|---|---|
| Social Security | Not taxed | Delaware does not tax Social Security benefits. |
| Railroad Retirement Benefits | Not taxed | Generally excluded from Delaware income tax. |
| Roth IRA Qualified Withdrawals | Usually not taxed | Qualified Roth withdrawals are generally not taxable. |
| Traditional IRA Withdrawals | Partially taxed | Taxable, but eligible taxpayers may use Delaware’s retirement income exclusion. |
| 401(k) Withdrawals | Partially taxed | Taxable, but may qualify for the retirement income exclusion. |
| 403(b) Withdrawals | Partially taxed | May qualify for the retirement income exclusion. |
| 457 Plan Withdrawals | Partially taxed | May qualify for the retirement income exclusion. |
| Private Pension | Partially taxed | Residents age 60+ may exclude up to $12,500 of eligible retirement income. |
| Government Pension | Partially taxed | The same retirement income exclusion rules generally apply. |
| Military Pension | Partially taxed | Special rules apply, and retirement income exclusions may be available. |
| Required Minimum Distributions (RMDs) | Partially taxed | Taxable, but may qualify for the retirement income exclusion. |
| Annuity Income | Partially taxed | Depends on the type of annuity and your eligibility for Delaware’s retirement income exclusion. |
| Bank Interest / CD Interest | Taxed | Generally included in Delaware taxable income. |
| U.S. Treasury Interest | Not taxed | Interest from federal government obligations is generally exempt from Delaware income tax. |
| Stock Dividends | Partially taxed | May qualify as eligible retirement income for the Delaware retirement exclusion. |
| Capital Gains (Stocks, ETFs, Mutual Funds) | Partially taxed | Taxable, but may qualify for Delaware’s retirement income exclusion. |
| Rental Income | Partially taxed | Taxable; may qualify if it meets Delaware’s eligible retirement income rules. |
| Wages After Retirement | Taxed | Delaware taxes earned income from employment. |
| Self-Employment Income | Taxed | Business and self-employment income are taxable. |
| Inheritance Received | Not taxed | Delaware has no inheritance tax. |
| Estate Tax | Not taxed | Delaware has no estate tax. |
https://revenue.delaware.gov/ | https://legis.delaware.gov/
Delaware provides favorable tax treatment for several types of retirement income, particularly through exemptions and retirement income exclusions.
Filing status & income
Delaware tax credits
Delaware grants a personal credit of $110 per federal exemption, plus an added $110 for each filer age 65 or older. These are applied automatically based on the choices above.
Results
| Income range | Rate | Tax |
|---|
Delaware Retirement Income Exclusion
| Your age | Maximum exclusion |
|---|---|
| Under 60 | Up to $2,000 |
| Age 60 or older | Up to $12,500 |
| Military retiree (any age) | Up to $12,500 |
Taxpayers Age 60 or Older
Residents aged 60 and older may subtract for exclusion that apply to:
- Pension income
- IRA distributions
- 401(k) distributions
- 457 plan distributions
- Interest
- Dividends
- Capital gains
- Net rental income
The maximum subtraction is $12,500, regardless of the source combination.
Example: A 67-year-old Delaware resident receives the following retirement income:
Pension Income: $8,000
IRA Withdrawal: $3,000
Interest & Dividends: $4,000
Total Eligible Retirement Income: $15,000
Delaware Retirement Income Subtraction: $12,500
Remaining Taxable Retirement Income: $2,500
Taxpayers Under Age 60
For taxpayers under age 60, Delaware provides a smaller retirement subtraction of $2,000 for qualifying pension income.
Eligible pensions include certain payments from:
- Private employers
- The United States government
- Delaware government
- Delaware political subdivisions
But, taxpayers under 60 generally cannot claim the broader eligible retirement income exclusion for items such as interest, dividends, or IRA distributions.
What States Do Not Tax Your Pension or Social Security?
See the full list of states that don’t tax your pension or Social Security — takes under 2 minutes.
Check My StateTypes of Retirement Income Delaware Taxes
Not every source of retirement income receives the same treatment.
| Income Type | Delaware Taxable? | How Are They Taxed? |
|---|---|---|
| Pension income | Yes, partially | Taxed only on the amount above the allowed retirement income exclusion. |
| 401(k) withdrawals | Yes, partially | Taxed on withdrawals exceeding the eligible retirement income exclusion. |
| Traditional IRA withdrawals | Yes, partially | Taxed on withdrawals exceeding the eligible retirement income exclusion. |
| 403(b) / 457 plan withdrawals | Yes, partially | Taxed on amounts above the eligible retirement income exclusion. |
| Annuity income (taxable portion) | Yes | The taxable portion of annuity payments may be subject to Delaware income tax. |
| Interest income | Yes, potentially | Taxable if it is not covered by the retirement income exclusion. |
| Dividend income | Yes, potentially | Taxable if it is not covered by the retirement income exclusion. |
| Capital gains | Yes, potentially | Taxable if they are not covered by the retirement income exclusion. |
| Net rental income | Yes, potentially | Taxable if it is not covered by the retirement income exclusion. |
1. Pensions
Private pensions, public pensions, and most federal pensions are generally taxable because they’re included in your federal AGI.
But they qualify for Delaware’s retirement income exclusion if you’re eligible.
2. Traditional IRA, 401(k), and 457 Plan Withdrawals
Distributions from traditional retirement accounts are generally taxed the same way as pension income.
If you’re eligible for Delaware’s retirement exclusion, these withdrawals count toward your annual exclusion limit.
3. Roth IRA Withdrawals
Qualified Roth IRA distributions are generally not taxable in Delaware.
That’s because qualified Roth withdrawals aren’t included in your federal AGI in the first place, so there’s nothing for Delaware to tax.
4. Annuities
Tax treatment depends on how the annuity was funded.
If your annuity payments come from pretax retirement savings, the taxable portion is generally treated like pension income.
But, for annuities purchased with after-tax dollars, only the taxable earnings portion is included in income.
5. Investment Income
Interest, dividends, capital gains, and certain rental income are generally taxable in Delaware.
If you are a taxpayers who qualify, some of this income may count toward the state’s retirement income exclusion, subject to the annual limit.
Are Social Security Taxed in Delaware?
No, Social Security benefits are completely exempt from Delaware income tax.
| Income Type | Delaware Taxed? |
|---|---|
| Social Security retirement benefits | No |
| Social Security survivor benefits | No |
| Social Security disability benefits (SSDI) | No |
| SSI (Supplemental Security Income) | No |
The same exemption applies to Railroad Retirement benefits.
Even if these benefits appear in your federal adjusted gross income, Delaware allows you to subtract them when calculating your state taxable income.
Federal Benefits
Other federal retirement benefits, including most federal employee pensions, do not receive a blanket exemption.
Instead, they’re generally treated like other pension income and may qualify for the state’s retirement income exclusion.
| Federal Retirement Income Type | Delaware Taxed? |
|---|---|
| Federal Civil Service Pension (FERS/CSRS) | Partially |
| Thrift Savings Plan (TSP) Withdrawals | Partially |
| Federal Government Deferred Compensation Plans (457 Plans) | Partially |
| U.S. Military Retirement Pay | Partially |
| Federal Railroad Retirement Benefits | No |
| Social Security Benefits | No |
Military Pensions and Veterans
Delaware offers special treatment for military retirement.
Veterans’ disability benefits also remain tax-free because they generally aren’t included in federal taxable income.
Military retirees can exclude up to $12,500 of military pension income.
The $12,500 exclusion applies at any age for qualifying military retirees.
- Up to $12,500 for a military pension.
- Up to $2,000 for most other pensions.
Up to $12,500 for qualifying pension and retirement income.
The exclusion cannot exceed the amount of pension income received.
- Army, Navy, Air Force, Marine Corps
- Space Force & Coast Guard
- National Guard
- Certain federal uniformed services
Delaware vs. Other Retirement-Friendly States
Delaware falls somewhere in the middle when it comes to taxing retirees.
Some states, including Florida and Texas, don’t have a state income tax at all, meaning they don’t tax retirement income as compared to California.
Delaware does impose an income tax, but it offsets part of that burden by exempting Social Security and offering retirement income exclusions.
Here’s how Delaware compares with a few other retirement-friendly states.
Retirement Tax Friendliness Differs By State
How each state taxes Social Security and pension / IRA / 401(k) income
Hover or tap a state to see details
Retirement tax advantages are strongest in states with no income tax or broad retirement-income exemptions.
Delaware offers a balanced option with retiree-friendly features, especially for those seeking East Coast access and a lower overall tax burden.
Delaware Tax FAQs
Yes, if Delaware income exceeds the filing threshold. Full-year residents use Form PIT-RES, while nonresidents use Form PIT-NON.
Delaware residents file Form PIT-RES, and nonresidents file Form PIT-NON. Federal tax forms and supporting documents must be included.
Retirees age 60 or older may exclude up to $12,500 of eligible pension and retirement income. Any amount above the limit is taxable.
No. Delaware does not tax Social Security or Railroad Retirement benefits.
Yes. Taxpayers age 65 or older or blind may claim an additional $2,500 deduction if they take the standard deduction.
Delaware offers limited retiree-specific credits. Some low-income retirees or qualifying individuals may qualify for credits such as the Delaware Earned Income Tax Credit.
Military retirees may qualify for the $12,500 pension exclusion. VA disability benefits are not taxed in Delaware.
A retiree can subtract up to $12,500 of eligible retirement income. Any remaining taxable income is reported on the Delaware return.
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