Delaware Tax and CPA Services: State, County and City Taxes

Delaware is best known as the state where many U.S. companies incorporate, but it also has residents, workers and local businesses with ordinary tax questions. The state has no sales tax, yet it charges a gross receipts tax on businesses, an annual tax on LLCs, and a graduated personal income tax. It also launched a paid family and medical leave program that reached full effect in 2026. We serve Delaware clients remotely from our Naperville, Illinois office.

Individual income tax

The Division of Revenue says rates range from 2.2 percent to 5.55 percent for income under $60,000, with a maximum rate of 6.6 percent on income of $60,000 or more. Residents file Form PIT-RES and nonresidents file PIT-NON. Delaware starts from federal adjusted gross income and then applies its own modifications and a standard deduction or itemized deductions; see the annual instruction booklets for the figures that apply to each year.

Retirees get a favorable result. Social Security and Railroad Retirement benefits are not taxable in Delaware. Residents who are 60 or older can exclude up to $12,500 of pension and eligible retirement income, and those under 60 who receive a pension are limited to a $2,000 exclusion. The instructions define which kinds of retirement income count toward that limit.

Nonresidents who work in Delaware must file. The Division's own example describes a New Jersey resident working in Delaware who files PIT-NON, and the employer must withhold Delaware tax for as long as the employee works in Delaware. This matters for commuters from Pennsylvania, Maryland and New Jersey, and for H-1B workers living across a state line. See our multi-state tax service.

Business taxes

Gross receipts tax. Delaware charges a gross receipts tax on sellers of goods and providers of services rather than a sales tax. The tax applies to total in-state receipts with no deduction for cost of goods, labor, interest, discounts, delivery or taxes. Rates run from 0.0945 percent to 1.9914 percent depending on the business activity, and a business with more than one activity reports each separately. Most businesses also need a Delaware business license, with an annual fee, and many categories get a monthly exclusion before the tax applies. Because the tax hits revenue and not profit, even an unprofitable business can owe it.

Corporate income tax. Corporations that conduct business in Delaware must file Form CIT-TAX regardless of income. The rate is 8.7 percent of federal taxable income apportioned to Delaware, using a three-factor formula of property, wages and sales. Delaware does not permit consolidated corporate returns, so each member of a group files separately. S corporations file Form SCT-RTN.

LLCs and franchise tax. Each LLC, LP and GP formed or registered in Delaware owes $400 a year, due on or before June 1, and files no annual report. A late payment adds a $200 penalty plus 1.5 percent monthly interest. Domestic corporations instead file an annual report and pay franchise tax by March 1, with the Division of Corporations' minimum at $175 under the authorized shares method and $400 under the assumed par value capital method. A Delaware entity that operates in another state generally also registers there, which is why formation decisions belong in a broader plan; see business formation and entity selection.

Sales and use tax

Delaware does not have a general sales tax. Retailers still face the gross receipts tax. A Delaware business that sells online into other states may have to collect sales tax there, so review sales tax nexus and our sales tax service for the states where your customers live.

Payroll in Delaware

• Withholding: employers withhold Delaware income tax through the Division of Revenue's withholding program, with a published table of 2026 due dates. See state income tax withholding.
• Unemployment insurance: register with Form UC-1 no later than 20 days after the first day of business. A new employer's rate is the average of the rates of all Delaware employers over the last five years. The Department of Labor sets the taxable wage base, so confirm the current figure. See state unemployment insurance.
• Paid leave: Delaware Paid Leave contributions began January 1, 2025, and the program took full effect January 1, 2026, with weekly benefits of up to $900. Employers with nine or fewer employees are exempt, those with 10 to 24 employees offer parental leave only, and those with 25 or more have full coverage. Employers may require employees to pay up to half of the cost. See state paid family and medical leave.

Counties, cities and local taxes

Delaware has three counties, New Castle, Kent and Sussex, and property taxes are billed through county and school district offices rather than by the state revenue division. The City of Wilmington separately administers its own city wage and earned income taxes for people who work or live there, so a Wilmington employee or employer should confirm local filing duties. Our local payroll taxes guide explains how to check.

How we can help

We prepare Delaware resident and nonresident returns, help business owners understand the gross receipts tax and license, track LLC and franchise tax deadlines, and set up payroll including paid leave contributions. For a notice from the Division of Revenue, see state tax notices and representation. Contact us to start; this page is general information.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.