Overview of Delaware Taxes
Delaware is known as a tax haven, but even residents of the First State aren’t exempt from taxes. There are seven tax brackets in the state and the highest income tax rate is 6.60%. There are also local income taxes in Wilmington.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Delaware Paycheck Calculator
Delaware Paycheck Quick Facts
- Delaware income tax rate: 0% - 6.60%
- Median household income: $65,627 (U.S. Census Bureau)
- Number of cities that have local income taxes: 1
How Your Delaware Paycheck Works
When you get paid, your employer takes out income taxes from your paycheck. This includes federal income taxes (which the IRS puts toward your annual income taxes) and FICA taxes (which fund Social Security and Medicare). For Delaware residents, it also includes state income taxes, as well as local taxes for people who live or work in Wilmington. Your employer uses the information you filled out on your W-4 to figure out how much should be withheld from each of your paychecks.
Withholding amounts changed in early 2018 because of the new tax bill signed by President Trump. If you haven’t already, make sure to check your W-4 because the IRS has made changes to the form for 2020. The new version doesn’t ask you to list total allowances. Instead of claiming allowances, employees are required to enter dollar amounts for income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. There's also a new five-step process that allows filers to enter personal information, claim dependents and indicate any additional jobs or income.
Only those adjusting their withholdings or changing jobs will be affected by these changes, at least for now. While employees hired before 2020 aren’t required to complete the updated W-4, anyone who gets a new job after Jan. 1, 2020 must fill it out. The tax return you file in April 2021 will contain any adjustments you’ve made to your withholdings in 2020.
Your marital status is one of many factors that will affect how much is taken out in federal taxes. If you’re single or married and filing separately, your taxes are different than if you decide to file with your spouse or declare that you’re the head of household.
Your employer is also responsible for withholding FICA taxes from your wages. These are Social Security and Medicare taxes, and they are withheld at rates of 6.2% and 1.45% of your wages. The total contributions that the federal government requires to Social Security and Medicare are double that amount, but your employer pays the other half. Any wages you earn in excess of $200,000 are also subject to a 0.9% Medicare surtax, which employers do not match. If you are self-employed, you have to pay the self-employment tax, which is equal to the full 12.4% in Social Security taxes and 2.9% in Medicare taxes.
Delaware Median Household Income
|Year||Median Household Income|
Your marital status doesn’t affect state taxes in Delaware, since the income tax brackets are the same regardless of your filing status. If you make $2,000 or less in taxable income, you don’t have to pay any state taxes. If you make between $2,000 and $5,000 the tax rate is 2.20%; up to $10,000, it’s 3.90%; up to $20,000, it’s 4.80%; up to $25,000, it’s 5.20%; up to $60,000, it’s 5.55%; and over $60,000, it’s 6.60%.
If you live or work in the city of Wilmington, you also have to pay a 1.25% local income tax, also known as the City Wage Tax.
For those considering buying a home in Delaware, our mortgage guide is a great place to start the process of getting a mortgage. With information on rates and the different kinds of loans, this guide puts the mortgage-related info you care about in one place.
Income Tax Brackets
|Delaware Taxable Income||Rate|
|$0 - $2,000||0.00%|
|$2,000 - $5,000||2.20%|
|$5,000 - $10,000||3.90%|
|$10,000 - $20,000||4.80%|
|$20,000 - $25,000||5.20%|
|$25,000 - $60,000||5.55%|
A financial advisor in Delaware can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
How You Can Affect Your Delaware Paycheck
You can take steps to change the size of your Delaware paycheck. If you can afford it, consider saving more in employer-sponsored retirement accounts, such as a 401(k) or 403(b). While the amount of each of your paychecks will go down, so will your taxable income, as that money is contributed to your account before taxes. This may even push you into a lower tax bracket. Depending on what your employer offers, you may also have the option of putting some of your paycheck toward benefits like health or life insurance, a health savings account (HSA) or a flexible spending account (FSA).
You can also ask your employer to simply withhold an additional dollar amount. Say, for example, you want to withhold $50 from each paycheck: Simply write that amount on the correct line on a new W-4 form. It might mean you get a smaller paycheck, but you’ll avoid paying a large lump sum when you file your taxes.
Delaware Top Income Tax Rate
|Year||Top Income Tax Rate|
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics