State retirement taxes · 2026
Does Delaware tax retirement income?
Short answer: Partly. Delaware does not tax Social Security benefits. Up to $12,500 per person of pension, IRA and investment income is excluded at 60+.
What’s taxed in Delaware
2026 rules.
- Social SecurityNot taxed
- Delaware does not tax Social Security benefits.
- PensionsPartly taxed
- At 60 or older, up to $12,500 per person of pension and other retirement income is excluded; under 60, up to $2,000 of pension.
- IRA & 401(k) withdrawalsPartly taxed
- At 60+, IRA and 401(k) withdrawals count toward the same $12,500 exclusion.
- Military retirement payPartly taxed
- Through 2026, retirees under 60 can exclude up to $12,500 of military pension; at 60+ it counts toward the general $12,500 exclusion. SB 219 raises the military cap to $15,000 in 2027, $20,000 in 2028 and $25,000 from 2029, at any age (filers 60+ take the larger of the two).
- Income tax rate6.6% top
- Seven brackets, the same for every filing status and unchanged since 2014: 0% on the first $2,000, then 2.2% rising to 6.6% on taxable income over $60,000.
Does Delaware tax Social Security?
Delaware does not tax Social Security benefits.
Social Security and Railroad Retirement benefits are not taxable in Delaware, with no age or income test.
Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.
Are pensions taxed in Delaware?
At 60 or older, up to $12,500 per person of pension and other retirement income is excluded; under 60, up to $2,000 of pension.
Under 60, up to $2,000 of employer or government pension income is excluded. At 60 or older (by December 31), up to $12,500 per person is excluded, covering pensions plus “eligible retirement income” — IRAs, 401(k)s, government deferred compensation, dividends, capital gains, interest and net rental income. Penalized early distributions do not qualify.
Public vs. private pensions: Public and private pensions share the same exclusion.
Are IRA and 401(k) withdrawals taxed in Delaware?
At 60+, IRA and 401(k) withdrawals count toward the same $12,500 exclusion.
IRA, 401(k) and 457 distributions count toward the $12,500 exclusion at 60 or older, together with pensions and investment income. Under 60, IRA withdrawals are not excludable.
Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.
Is military retirement pay taxed in Delaware?
Through 2026, retirees under 60 can exclude up to $12,500 of military pension; at 60+ it counts toward the general $12,500 exclusion. SB 219 raises the military cap to $15,000 in 2027, $20,000 in 2028 and $25,000 from 2029, at any age (filers 60+ take the larger of the two).
What is Delaware’s income tax rate?
7 brackets, topping out at 6.6%.
Seven brackets, the same for every filing status and unchanged since 2014: 0% on the first $2,000, then 2.2% rising to 6.6% on taxable income over $60,000.
2026 brackets. Each rate applies to taxable income above the amount shown.
| All filers | Rate |
|---|---|
| $0 | 0% |
| $2,000 | 2.2% |
| $5,000 | 3.9% |
| $10,000 | 4.8% |
| $20,000 | 5.2% |
| $25,000 | 5.55% |
| $60,000 | 6.6% |
Standard deduction and exemptions
Standard deduction: $3,250 single, head of household or married filing separately; $6,500 joint. Add $2,500 for each person 65 or older or blind ($5,000 if both). Personal credit: $110 per person.
What tax breaks do seniors get in Delaware?
An extra $110 personal credit for each filer 60 or older; the extra $2,500 standard deduction at 65+; the $12,500 retirement exclusion at 60+; and a low-income exclusion for people over 60 or disabled — $2,000 ($4,000 joint) if earned income is under $2,500 ($5,000 joint) and AGI is $10,000 or less ($20,000 joint).
What changed for 2026?
SB 219, signed August 17, 2026, raises the military pension cap ($15,000 in 2027, $20,000 in 2028, $25,000 from 2029). It also adds a residency (domicile) test for people 60+ claiming the pension exclusion: at least 3 years in Delaware, or 5 years if you became a Delaware resident on or after January 1, 2027. The law does not say which tax year the residency test starts; watch for Division of Revenue guidance.
Rules from the 2025 PIT-RES instructions and the Delaware Code as amended by SB 219 of 2026.
What we couldn’t confirm
- SB 219’s new domicile test has no stated start year; reports say 2027, but the codified text could reach 2026.
How Delaware compares with its neighbors
Thinking of moving across the line? Here’s how each bordering state treats retirement income in 2026.
- DelawareThis pageFriendlySocial Security Not taxedTop rate: 6.6% top
- MarylandFriendlySocial Security Not taxedTop rate: 6.5% top
- New JerseyFriendlySocial Security Not taxedTop rate: 10.75% top
- PennsylvaniaVery friendlySocial Security Not taxedTop rate: 3.07% flat
State tax is half the picture — check the federal side
Delaware retirement tax questions
Is Delaware tax-friendly for retirees?
We rate Delaware “Friendly” for 2026. Delaware does not tax Social Security benefits. Up to $12,500 per person of pension, IRA and investment income is excluded at 60+. The top income tax rate is 6.6%.
Are required minimum distributions (RMDs) taxed in Delaware?
RMDs are withdrawals from IRAs and 401(k)-type plans, so they follow Delaware’s rules for those accounts. At 60+, IRA and 401(k) withdrawals count toward the same $12,500 exclusion.
Is military retirement pay taxed in Delaware?
Partly. Through 2026, retirees under 60 can exclude up to $12,500 of military pension; at 60+ it counts toward the general $12,500 exclusion. SB 219 raises the military cap to $15,000 in 2027, $20,000 in 2028 and $25,000 from 2029, at any age (filers 60+ take the larger of the two).
Do I have to live in Delaware for a while to get the pension exclusion?
SB 219 (signed August 17, 2026) adds a domicile test for people 60 or older: at least 3 years in Delaware, or 5 years if you became a resident on or after January 1, 2027. The law doesn’t state which tax year the test starts, so check the Division of Revenue’s guidance before you file.
Sources for Delaware
Primary sources only. We re-check them whenever an agency publishes new figures.
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