Delaware has progressive income tax up to 6.6% — but NO state sales tax. The corporate law capital of the US offers a balanced tax environment that attracts financial services workers.
Delaware's standard deduction is small ($3,250 single / $6,500 married), meaning more income is taxable than in states that use the federal standard deduction. However, the 0% bracket on the first $2,000 and low starting rates partially offset this. Wilmington is a major financial services hub — JPMorgan Chase, Bank of America, Discover, and many credit card companies have significant Delaware operations. No Delaware municipality levies a local income tax (Wilmington imposes a 1.25% city wage tax on residents, 1.25% on non-residents who work in Wilmington).
| Rate | Delaware Taxable Income (all filers) |
|---|---|
| 0% | $0 – $2,000 |
| 2.2% | $2,000 – $5,000 |
| 3.9% | $5,000 – $10,000 |
| 4.8% | $10,000 – $20,000 |
| 5.2% | $20,000 – $25,000 |
| 5.55% | $25,000 – $60,000 |
| 6.6% | $60,000+ |
Delaware standard deduction: $3,250 (single) / $6,500 (married). Brackets are the same for all filing statuses. Wilmington residents also pay a 1.25% city wage tax. Estimates only — consult DE Division of Revenue for exact withholding.
Delaware is the smallest state in the continental US by area, yet it is home to more corporations than any other state. Over 60% of Fortune 500 companies — including Apple, Google, Amazon, Walmart, and virtually every major bank and investment fund — are incorporated in Delaware. The reason is not Delaware's income tax rate but its legal infrastructure: the Delaware Court of Chancery, a specialized business court with judges (not juries) who are expert in corporate law, 200+ years of accumulated corporate legal precedents, and a legislature that responds quickly to update corporate statutes. Delaware makes corporate governance predictable and disputes resolvable efficiently.
Wilmington is Delaware's financial capital and home to a massive financial services sector. JPMorgan Chase, Bank of America, Citibank (credit card operations), Discover, Capital One, and dozens of other financial firms maintain significant operations in Wilmington. This is partly the legacy of the same 1980 deregulation movement that brought credit card companies to South Dakota — Delaware also passed favorable banking laws in the 1980s. Today, Wilmington's legal, financial, and corporate services sectors employ a large share of the state's workforce at well-above-average wages. Many Wilmington workers commute from Philadelphia (25 miles north) or from New Jersey, Maryland, and Pennsylvania suburbs.
Delaware's no-sales-tax policy is a significant economic advantage. Delaware's outlet malls along Route 1 (particularly in Rehoboth Beach) attract shoppers from Maryland, Pennsylvania, and New Jersey specifically because there is no sales tax on purchases. Major retailers position Delaware locations to capture cross-border shopping traffic. For Delaware residents, the absence of sales tax on groceries, clothing, cars, electronics, and most goods provides meaningful savings — partially offsetting the income tax burden. Dover is the state capital; Rehoboth Beach, Lewes, and Bethany Beach are the summer resort communities that attract East Coast vacationers and second-home owners.
Estimates only. Delaware std deduction $3,250 single/$6,500 married; brackets 0%–6.6%. Wilmington residents add 1.25% city wage tax. Consult DE Division of Revenue for exact amounts.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| Delaware State Tax (0%–6.6%) | −$0.00 |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
Delaware has seven progressive brackets: 0% on the first $2,000, 2.2% on $2,000–$5,000, 3.9% on $5,000–$10,000, 4.8% on $10,000–$20,000, 5.2% on $20,000–$25,000, 5.55% on $25,000–$60,000, and 6.6% on income above $60,000. Delaware's standard deduction is small: $3,250 (single) / $6,500 (married), so more income is taxable than in states using the federal standard deduction. On $80,000 (single), Delaware income tax is approximately $4,100–$4,600 per year.
No. Delaware is one of only five US states with no state sales tax (the others are Alaska, Montana, New Hampshire, and Oregon). This means no sales tax on groceries, clothing, electronics, cars, or any other consumer goods. Delaware's outlet malls at Christiana and along Route 1 near the beaches attract heavy cross-border shopping from Pennsylvania (6% sales tax), Maryland (6%), and New Jersey (6.625%) residents who make large purchases in Delaware specifically to avoid sales tax.
Yes. Wilmington is unusual among Delaware cities in levying a city wage tax of 1.25% on residents' wages and 1.25% on non-residents' wages earned within Wilmington. This applies to workers who live in Wilmington (even if they work elsewhere) and to workers who commute to Wilmington jobs from Pennsylvania, New Jersey, or Maryland. If you work in Wilmington, add approximately 1.25% to your effective Delaware tax rate for purposes of estimating take-home pay. No other Delaware municipality levies a wage tax.
Delaware offers three key advantages for corporations: (1) the Court of Chancery, a specialized business court that resolves corporate disputes quickly with expert judges rather than juries; (2) over 200 years of accumulated corporate law precedents that make legal outcomes predictable; and (3) a responsive legislature that regularly updates the Delaware General Corporation Law to accommodate modern business needs. The income tax benefit is separate — Delaware does not tax corporations' out-of-state income, so a company incorporated in Delaware but operating in other states pays no Delaware corporate income tax on that outside activity.
Delaware has income tax up to 6.6% but no sales tax. Maryland has income tax up to 5.75% plus local income tax (2.25%–3.2% depending on county) and a 6% sales tax. Pennsylvania has a flat 3.07% income tax plus local earned income taxes (often 1%–3%) and a 6% sales tax. For most middle-income workers, Delaware's total tax burden (income tax only, no sales tax) is competitive with — and often lower than — Maryland's or Pennsylvania's combined income, local, and sales tax burden. High earners who make large purchases benefit most from Delaware's no-sales-tax advantage.