Historical Delaware tax policy information (2024)

in Delaware

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The historical Delaware tax policy information below is presented as it was written on Ballotpedia in 2015. For more current information regarding tax policy, click here.

Delaware generates the bulk of its tax revenue by levying a personal income tax and select sales taxes (otherwise known as excise taxes). The state derives its constitutional authority to tax from Article VIII of the state constitution.^[2][3]

Tax policy can vary from state to state. States levy taxes to help fund the variety of services provided by state governments. Tax collections comprise approximately 40 percent of the states' total revenues. The rest comes from non-tax sources, such as intergovernmental aid (e.g., federal funds), lottery revenues and fees. The primary types of taxes levied by state governments include personal income tax, general sales tax, excise (or special sales) taxes and corporate income tax.^[4]

Tax rates

Personal income tax

See also: Personal income tax

The personal income tax rates in Delaware for the 2015 tax year ranged from 0 percent to 6.6 percent. An individual's tax liability varies according to his or her tax bracket. A tax bracket is the income range to which a tax rate applies. In Delaware, there are six income tax brackets.^[7][8][9]

The table below summarizes personal income tax rates for Delaware and neighboring states in 2015. Numerical rankings are tabulated by excluding states with no personal income tax (as well as New Hampshire and Tennessee, which charge income tax only on dividends and interest) and are based on the highest possible tax rate for which an individual might be liable. Because some states are excluded from the rankings and a few share common uppermost rates, there are 34 numerical rankings, with 1 indicating the highest uppermost rate and 34 indicating the lowest.^[8]

Personal exemptions

States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation. ^[10]

Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions for Delaware and its neighboring states as reported by the Tax Policy Center are reported in the chart below.^[11]

In Delaware, state personal exemptions for single filers were equal to $110, which was third highest (or third lowest) among its neighbors that allowed for personal income tax exemptions. Exemptions for those filing as a married couple were equal to $220 in 2015. Delaware regulations also allow filers to receive exemptions for dependents. These exemptions were equal to about $110 in 2015.^[12]

Capital gains tax

See also: Capital gains tax

A capital gains tax is a tax levied on the profit gleaned from the sale of a capital asset. Examples of capital assets include stocks, businesses, land parcels, homes, personal items and more. Capital gains are taxable at both the federal and state levels. While the federal government taxes capital gains at a lower rate than regular personal income, states usually tax capital gains at the same rates as regular income. In Delaware, the uppermost capital gains tax rate was 6.6 percent. The combined uppermost federal and state tax rates totaled 29 percent, ranking 13th highest in the nation.^[13][14][15]

The table below summarizes uppermost capital gains tax rates for Delaware and neighboring states in 2015.

Sales tax

See also: Sales tax

Almost all states employ a statewide sales tax, which ranges from 2.9 percent in Colorado to 7.5 percent in California. Additionally, many states allow the levying of local sales taxes, which are then added to the state's tax.

Delaware does not levy any sales taxes. This places Delaware among a number of states with no sales taxes. The table below displays the state tax rates, average local tax rates, and average combined tax rates for Delaware's neighboring states.

Delaware does not levy a state sales tax. The table below summarizes sales tax rates for Delaware and neighboring states in 2015. The table also notes the state's policy with respect to types of items commonly exempted from sales tax (i.e., food, prescription drugs and nonprescription drugs).^[6]

Excise taxes

See also: Excise taxes

Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is then included in the sale price of the item and passed on to the consumer. The tables below provide excise tax rates for motor fuel, alcohol and cigarettes in Delaware and neighboring states. In Delaware, excise tax revenues comprised 14.6 percent of total tax collections in 2013.^{[16][17][18][19]}

Corporate income tax

See also: Corporate income tax

Corporate income tax is the tax levied by a state on a company's profits. In tax year 2015, Delaware levied an 8.7 percent corporate income tax. The table below lists the corporate income tax rates for Delaware and neighboring states in 2015.^[20][21]

Business tax climate

In October 2014, the Tax Foundation released a report evaluating business tax systems in the states for fiscal year 2015. The report's authors graded the states by analyzing more than 100 variables in five general tax areas: corporate taxes, personal income taxes, sales taxes, unemployment insurance taxes and property taxes. States were scored on a scale of zero to 10, with a score of zero indicating the worst business tax structure and a score of 10 indicating the best. States were then ranked on a scale of one to 50, with a ranking of one indicating the state with the best business tax climate and a score of 50 indicating the state with the worst.^[22]

In fiscal year 2015, Delaware's business tax climate was ranked 14th in the nation. The table below provides scores and rankings for Delaware and neighboring states. To access the full report, click here.^[22]

Property tax

See also: Property tax

Most often, property tax applies to real estate, although some states levy property taxes on other types of personal property, such as automobiles. Generally speaking, an individual's property tax liability is determined by the tax rate and the tax base, which is "determined by both the assessed value of the property and ... the share of the assessed value that is subject to tax." To learn more about property taxes, including tabulation methods, see this page.^[23][24][25]

Property taxes comprise the lion's share of local government revenues. In 2010, property taxes accounted for 75 percent of the tax revenues collected by local government entities (such as cities, counties, school districts, etc.). States, on the other hand, generate very little revenue from property taxes. Property tax rates can vary substantially from locality to locality within a state.^[23][24]

The table below provides the mean amount of property taxes paid, as well as property tax as a mean percentage of home value, for Delaware and neighboring states for 2012. In terms of mean property taxes paid, Delaware ranked lowest when compared to neighboring states.^[23]

The table below lists per capita state and local property tax collections for Delaware and neighboring states for fiscal year 2012. According to the Tax Foundation, which compiled the data below, Delaware ranked 46th in the country in terms of per capita collections.^[26]

Estate and inheritance taxes

See also: Estate and inheritance taxes

Estate and inheritance taxes are levied on the property of deceased individuals (decedents). Generally speaking, an estate tax is applied to the value of a decedent's property and is paid from the estate before distribution to any heirs. By contrast, an inheritance tax is paid by the heir or heirs of a decedent's assets.^[27][28][29]

Delaware is one of 15 states (plus the District of Columbia) that levies an estate tax. In addition, Delaware taxpayers are also liable for the federal estate tax. The table below summarizes the estate tax rates for Delaware and neighboring states in 2015.^[29]

Tax revenues

See also: Delaware state budget and finances

The table below summarizes general fund revenue sources for Delaware and neighboring states in 2013. All figures are rendered in millions of dollars (for example, $1,500 translates to $1,500,000,000). Per capita figures have not been abbreviated.^[30]

The table below lists tax collections by source as a percentage of total collections for Delaware and neighboring states in 2013.^[3]

See also

• Tax policy in Delaware

Footnotes

v•e Budget policy
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Tax policy background	Personal income tax • Sales tax • Corporate income tax • Property tax • Excise taxes • Estate and inheritance taxes • Capital gains tax
State tax policy pages	Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming
Comparative analysis of state debt	Federal outlays to state government (2014-2017) • State tax revenue projections and shortfalls (2020-2021) • Proportion of state government general revenues from the federal government (2014-2018) • State debt per capita (2014-2018) • State unfunded public pension liabilities, 2003-2018