Delaware offers some nice advantages to retirees. It has no state sales tax and charges a very low state individual income tax.
Social Security income is not taxed in Delaware, so residents do not have to declare Social Security benefits on their state income tax returns. Railroad retirement benefits are not subject to state income tax in Delaware.
Delaware residents can deduct up to $12,500 of retirement income from their state tax returns. Income covered by this Exclusion includes: pensions, IRA distributions, annuities, dividends and even money from rental property. You must be 60 years of age or older to receive this exclusion.
Delaware Income Tax
Delaware has a graduated income rate which means the tax rate rises with the taxpayer's income level. The lowest rate is 2.2% and the highest rate is 5.95%. All Delaware residents with a taxable income of more than $60,000 a year will pay the 5.95% income tax rate. Persons with taxable incomes under $60,000 will need to consult the tax booklets prepared by the Delaware Department of Revenue.
No Sales Tax in Delaware
There are no Local or State Sales Taxes in Delaware; instead the state imposes a kind of income tax called a gross receipts tax on businesses. This does not affect residents because the businesses themselves pay the tax.
Property Tax in Delaware
Delaware has three counties, each of which assesses and collects property taxes in a different way. Most homeowners will have to pay five different property taxes: a school tax, a city tax, a county tax, a library tax, and a community college tax. These will be added together to determine the total levy. Information collected by the Delaware Economic Development Office indicates that the average property tax rate in the state $1-2 per $100 of assessed value. Property taxes in some cities in Delaware, including Wilmington, appear to be much higher than in unincorporated areas of the state.
Delaware Cell Phone Tax
There is a public utility tax on cell phones in Delaware that most residents must pay. It is possible to get an exemption from this tax by using a form provided by the Delaware Department of Revenue.
Delaware Cost of Living
Delaware offers a low cost living and low taxes for a state located on the East Coast. Statistics from the Office of Economic Development indicate that prices in the state's cities can be much lower than those in other urban areas. The cost of living in Wilmington was 23% lower than the cost of living in New Haven, Connecticut, according to these statistics.
The cost of the average home in Wilmington was $150,100 compared to $312,900 on New York's Long Island. The state's Office of Economic Development estimates that homes in Delaware cost 11% below the national average.
This makes Delaware a very affordable place to live even though it is within easy driving distance of New York, Philadelphia, Baltimore, and Washington DC. Delaware is also linked to the major cities in the Northeast by high speed rail.
|Cost of Living Rank:||#35|
|Income Tax:||2.2% - 6.95%|