Delaware Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

Remote Workers and Multi-State Taxation

Living in Delaware, Working for an Out-of-State Employer

As a Delaware resident, you owe Delaware income tax on ALL income, regardless of where your employer is located or where you physically work.

What this means:

• Employer location does NOT determine your Delaware tax obligation
• Income from employers headquartered in other states is taxable in Delaware
• Delaware requires proper Delaware tax withholding for resident employees
• If your out-of-state employer does not withhold Delaware tax, you must make quarterly estimated payments (Form PIT-EST) to avoid penalties

Example: A Delaware resident working remotely from their Delaware home for a New York-based company owes Delaware income tax on all wages from that employer.

Source: https://revenue.delaware.gov/frequently-asked-questions/personal-income-tax-faqs/ | https://revenue.delaware.gov/employers-guide-withholding-regulations-employers-duties/

Working in Delaware, Living in Another State

Non-residents who perform work physically in Delaware owe Delaware income tax on income earned from Delaware sources.

Physical Presence Rule: Income is sourced to Delaware based on where work is physically performed — not where the employer is headquartered or where the employee lives.

Example: A New Jersey resident who commutes to Wilmington to work owes Delaware income tax on wages earned during days worked in Delaware. They would file Form PIT-NON (Non-Resident return).

Source: https://revenue.delaware.gov/frequently-asked-questions/personal-income-tax-faqs/

⚠️ Interstate Tax Risk Indicator

Delaware has no reciprocal agreements with any other state. This creates multi-state tax complexity for workers crossing state lines. Common scenarios requiring careful planning:

High-risk combinations involving Delaware:

• Delaware residents working in New York — New York applies a “convenience of the employer” rule (see below). Residents may owe both Delaware and New York tax, with Delaware providing a credit for New York taxes paid.
• Delaware residents working in Pennsylvania — Pennsylvania has no reciprocal agreement with Delaware. Pennsylvania taxes income earned in Pennsylvania; Delaware residents claim a credit on their Delaware return.
• Delaware residents working in Maryland — Maryland imposes a “Special Non-resident tax” in addition to regular income tax on non-residents. Delaware residents working in Maryland may owe Maryland tax and claim a credit on their Delaware return.
• Delaware residents working in New Jersey — New Jersey taxes income earned in New Jersey. Delaware residents file a New Jersey non-resident return and claim a credit on their Delaware return.

Source: https://revenue.delaware.gov/frequently-asked-questions/personal-income-tax-faqs/ | https://revenue.delaware.gov/frequently-asked-questions/withholding-tax-faqs/

“Convenience of the Employer” Rule

Delaware does NOT apply a “convenience of the employer” rule. Delaware non-residents are taxed only on income from work physically performed in Delaware. If a non-resident works remotely from their home state for a Delaware employer, Delaware does not tax that income as long as the work is physically performed outside Delaware.

However, certain states DO apply this rule to Delaware residents working for those states’ employers. Most notably:

• New York applies its convenience of the employer rule. If a Delaware resident works remotely for a New York employer, New York may tax that income if the remote work is for the employee’s convenience rather than a business necessity of the employer. Delaware residents would pay New York tax on this income and claim a credit on their Delaware return.

Source: https://revenue.delaware.gov/employers-guide-withholding-regulations-employers-duties/ | https://revenue.delaware.gov/frequently-asked-questions/withholding-tax-faqs/

Reciprocal Agreements

Delaware has NO reciprocal agreements with any other state.

This means:

• Delaware residents working in other states are subject to that state’s income tax on wages earned there
• Non-residents working in Delaware are subject to Delaware income tax on Delaware-source wages
• There is no blanket exemption based on state of residence

What Delaware does provide: A credit against Delaware tax liability for income taxes paid to other states. This prevents full double taxation but does not eliminate all complexity or potential for additional tax liability when state rates differ.

Credit mechanics: The credit is limited to the lesser of (a) the tax actually paid to the other state, or (b) the Delaware tax computed on the ratio of other-state income to total Delaware AGI.

Practical implication: If you work in a state with a lower tax rate than Delaware’s, you may owe the difference to Delaware after the credit.

Source: https://revenue.delaware.gov/frequently-asked-questions/withholding-tax-faqs/ | https://revenue.delaware.gov/employers-guide-withholding-regulations-employers-duties/

Multi-State Tax Filing — Delaware Resident

When a Delaware resident earns income in multiple states:

1. File a Delaware resident return (Form PIT-RES) reporting ALL income from all sources
2. File non-resident returns in other states where income was earned
3. Claim a credit on your Delaware return (Line 28, Form PIT-RES) for taxes paid to other states
4. Complete DE Schedule I (Form PIT-RSS) if claiming credits for taxes paid to more than one state — list credits in highest to lowest order
5. Attach a signed copy of each other state’s return to your Delaware return

Source: Delaware Division of Revenue, Form PIT-RES Instructions 2025, Line 28 — https://revenuefiles.delaware.gov/2025/PITForms_Instructions/Instructions/PIT-RES_Instructions_2025-01.pdf